Friday, November 10, 2006

WESM price-fixing leads to higher electricty rates

Akala ko ba sabi ni GMA bababa ang singil sa kuryente natin via WESM? Eh nakikita ko sa bills namin ang taas pa rin ng singil! Naku, ano ba yan! I disagree with the cussing and abrasive tone the author has used in the article, pero aside from that, the article i think is a must read.)

Several cold storage plant owners are raising concerns that at the rate electricity rates are increasing, pretty soon many of them are going to have to close shop because they won’t be able to keep up with operating requirements.

According to members of Cold Chain Association of the Philippines (CCAP), the problems they’re faced with today are a direct function of the alleged “massive corruption” being perpetrated by insiders in the so-called wholesale electricity spot market (Wesm), naturally condoned by the National Power Corp. (Napocor), who are able to manipulate prices to their advantage.

CCAP members say as a result, power rates are shooting through the roof instead of easing up at the Wesm, which MalacaƱang had initially boasted as key to reducing electricity rates.

Anthony Dizon, CCAP president, said the biggest problem refrigerated facility owners are saddled with is the rising cost in electricity which is poised to become the highest in the Asean region, with the way these Napocor dickheads are manipulating the power situation in the country to make themselves a profit. This is because electricity comprises about 40 percent of the total operating cost of cold storage plants (which are run on a 24/7 schedule), which play a vital role in the storage and distribution of meat and vegetable products.

Beginning next month, it was confirmed the electricity consumers will be obliged to shell out an additional P1 per kilowatt hour, unless the Energy Regulation Commission drags its balls on the rate increase being sought by Meralco, which is a farfetched possibility. And as a result, millions of Filipinos are in for another round of increases in the prices of basic commodities.

When this happen, the public will start to feel the pinch being caused by the price increases that were occasioned by the price manipulation in the Wesm. Ironically, the Wesm was intended by its originators as a means of keeping electricity prices at a minimum, so this might fuel the engine of growth of the economy.

The Wesm was opened by energy officials last June 2006 on orders of MalacaƱang despite the failure to comply with the crucial requirement stated in the Electric Power Industry Reform Act (Epira) of 2001 of the sale of at least 70 percent of state-held power generating assets, which has resulted in the anomalous situation wherein trading in the electricity spot market is lorded over by government officials who are able to dictate on the smaller players.

In one of our previous columns, we pointed out that the concept of the Wesm will not work unless there is equal competition on the trading floor, to prevent collusion among the sellers. Our position is now being borne out with electricity prices on the uptick.

UPDATE: I believe the author of the article is Tribune columnist Herman Tiu Laurel, kahit na hindi nakalagay ang pangalan niya sa webpage. Typo, I think.

No comments: