POWER REGULATORS BLINK: PRICE CEILING ON SPOT MARKET CUT BY HALF

Amid the growing public anger over the record rise in electricity rates, government regulators on Saturday decided to set a lower price cap for electricity being traded on the Wholesale Electricity Spot Market (WESM) while authorities are studying how to prevent power rates increases in the future. The cap refers to the highest possible price that can be offered by power-generating companies selling their excess capacity on the WESM.

ALSO: Palace: Gov’t ready to cushion power rate hikes

Malacañang has assured the public that the government is ready to support the people amid the impending power rate increases. Secretary Herminio Coloma Jr. of the Presidential Communications Operations Office said a big portion of the P2.265-trillion budget is allocated for social protection and social safety nets.

ALSO: (Analysis) Economic recovery and presidential lethargy

The Philippines ends 2013, a year plagued by nightmarish news, with its political leadership seeking refuge in complacency and short of fresh initiatives to give impetus to reconstruction plans for typhoon-devastated Eastern Visayas. As the country enters 2014, the Aquino administration sent out a powerful but cheerless message to the nation: A yearend feel-good report describing 2013 as “a year of challenges” despite the economy posting “some of the highest growth numbers in Asia.” The report cited the administration’s “successes”—ranging from “spurring economic growth, expanding social services, enhancing peace and security, combating corruption, and instituting greater reform in government, as well as to ensuring that our countrymen rise from the rubble of man-made and natural calamities.” Those were mere platitudes cited in lieu of plans to push the reconstruction of Eastern Visayas.READ MORE BELOW.....

ALSO: It’s been a year of ups, downs, but mostly ups, says Malacañang

The Aquino administration has described 2013 as “a year of challenges” despite the economy posting “some of the highest growth numbers in Asia.” In its yearend report posted on gov.ph/featured/2013-yearend/, Malacañang said it was during the year that “our collective commitment to persevere and to stand shoulder to shoulder enabled us to overcome the trials set before us, thus making the world admire and respect us all the more.” The report talked about a “remarkable year for the Filipino people—one in which the President showed his indomitable will to lead the nation forward, and where the mandate for change was renewed in the midterm elections.”


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POWER REGULATORS BLINK: PRICE CEILING ON SPOT MARKET CUT BY HALF


http://business.inquirer.net/files/2013/12/meralco-linemen-power-rate.jpg

MANILA,
DECEMBER 30, 2013
(INQUIRER) By Riza T. Olchondra - Amid the growing public anger over the record rise in electricity rates, government regulators on Saturday decided to set a lower price cap for electricity being traded on the Wholesale Electricity Spot Market (WESM) while authorities are studying how to prevent power rates increases in the future.

The cap refers to the highest possible price that can be offered by power-generating companies selling their excess capacity on the WESM.

In a joint resolution with the Department of Energy (DOE) and the spot market operator, the Philippine Electricity Market Corp. (PEMC), released on Saturday, the Energy Regulatory Commission (ERC) set the new offer price ceiling on the WESM at P32,000 per megawatt hour (mWh), from the current P62,000 mWh, or P32 per kilowatt-hour (kWh), from the current P62/kWh.

The ERC, DOE and PEMC make up the WESM tripartite committee that monitors price volatilities on the spot market.

Regulators said the new ceiling would be in effect until the issuance of a new offer price cap “not later than 90 days” from the issuance of the joint resolution that was signed on Dec. 27.

Protests have greeted the huge increase in household electricity rates in Metro Manila and neighboring areas over the next three months from December, which power distributor Manila Electric Co. (Meralco) announced early this month.

Meralco explained the unprecedented P4.15/kWh increase in the generation charge as the result of a monthlong maintenance shutdown of the Malapaya natural gas plant in November/December as well as the unscheduled shutdown of other power plants, forcing it to source more of its power needs from the WESM where prices were higher than the Malampaya natural gas.

The WESM was created following the restructuring of the energy sector under the Electric Power Industry Reform Act (Epira) of 2001 for power suppliers to trade energy outputs and agree on prices.

The price paid is based on the last offer made to meet the demand, although a ceiling (called the “bid cap” or “price cap”) is set.

The spot market is designed so that distributors like Meralco and other buyers can get additional supply whenever electricity demand is higher than what the distributors have contracted for with power plant operators.

Pricing study ordered

Lowering the price that consumers have to pay for power is the main reason for the WESM’s creation. However, the spot market has been plagued by persistent price problems, culminating in spikes in the prices of traded electricity units from power generators last June.

The ERC has directed the PEMC to submit a study on the “appropriate” offer price cap within 30 days from the issuance of the Dec. 27 resolution. Hence, the new offer price cap is temporary and will remain in place only while the WESM pricing study is going on, the ERC said.

According to state regulators, the PEMC is already studying how to deal with several market design and implementation issues that recently became a hot topic with the record P4.15/kWh increase in the generation rate that Meralco will pass on to its customers in three phases starting this month.

Regulators noted during the period of the Malampaya shutdown that WESM prices were reaching the maximum offer price cap of P62/mWh “more often than usual and even during off-peak hours when demand for electricity is low.”
The resulting high market prices may have translated into considerable increases in Meralco’s and other distributors’ generation charges, which are passed on to electricity consumers, depending on the level of bilateral contracts and/or exposure on the WESM.

Market-driven

As the controversy over the Meralco power rate increase raged, the WESM tripartite committee convened on Dec. 13 to discuss possible adjustments to the offer price ceiling.

On Dec. 20, the committee agreed to put in place procedures and measures to deal with extreme price spikes or prolonged price volatility, in another meeting on the resolution to lower the price cap which took place on Dec. 27.

The new cap is based on the recently promulgated offer cap set by the WESM tripartite committee for the commercial operation of the Interim Mindanao Electricity Market.

“The new and revised offer price cap will be subjected to a public consultation and will be subject to the regular review and adjustments by the WESM tripartite committee,” the joint resolution said.

PEMC president Melinda Ocampo earlier explained that WESM prices are market-driven, such that if there is sufficient power, buyers such as Meralco can even get lower prices than their bilateral contracts.

“If there is insufficient supply or scarcity, that’s when prices go up,” Ocampo said.

Fears of a whitewash

Militant party-list lawmakers meanwhile are suspicious that the DOE’s investigation into the alleged collusion of power generators in the uncommonly high electricity rate increases could end up in a whitewash.

Party-list Representatives Neri Colmenares and Carlos Isagani Zarate (Bayan Muna) said they were concerned over Energy Secretary Jericho Petilla’s reported statement that he wanted Meralco to appeal the Supreme Court’s temporary restraining order (TRO) stopping the P4.15/kWh rate increase.

Petilla was quoted as saying that Meralco may have to borrow money to pay for power purchases, which he said could lead the distributor into charging higher electricity rates to pay off interest costs.

Colmenares said Petilla—whose offer to resign over his supposed failure to restore electricity to 100 percent of areas struck by Supertyphoon “Yolanda” has been rejected by President Aquino —should be replaced for his statements.

“It is clear that he (Petilla) views the extremely high power rate hike as aboveboard and regular,” Colmenares said in a statement.

“He should immediately be replaced because he is a threat to consumer interest,” he said.

He said Petilla’s statement indicated that he did not doubt the veracity of the computation of the rate hike, and was “practically preempting the Supreme Court and is siding with the power cartel.”

Zarate said the energy secretary had apparently turned his back on consumers affected by the “unjust” power rate hike.

“His statements totally unmasked the pretentious and misleading posturing of Secretary Petilla because in truth, he is a high-voltage defender of the now cartelized power industry. He is a protector of power oligarchs and their benefactors raking in billions of pesos from consumers. No wonder President Aquino retained his services,” he said.

The two party-list members said they were concerned that the joint DOE-ERC investigation into the alleged collusion among the power generators in the rate hikes would end in a whitewash.

Colmenares said he was optimistic the Supreme Court would strike down the Epira.

He said the justification citing the Epira for the automatic rate adjustment by distributors was unconstitutional because it did not provide for consumers challenging the rate hikes.

“We believe that our case against Meralco and the ERC would win in the Supreme Court. We have a very strong case and we think that the [court] will declare the Epira unconstitutional precisely because it does not allow consumers the due process right to question the generation charges,” he said.

Party-list members and militant groups have filed three petitions in the high court to stop Meralco from imposing the P4.15/kWh rate hike.

They are also asking the high tribunal to declare unconstitutional several provisions of the Epira, among them the sections empowering the ERC to determine, fix and approve the universal charge to be imposed on all electricity users. With a report from Leila B. Salaverria

Palace: Gov’t ready to cushion power rate hikes By Bong Lozada INQUIRER.net 5:58 pm | Sunday, December 29th, 2013

MANILA, Philippines—Malacañang has assured the public that the government is ready to support the people amid the impending power rate increases.

Secretary Herminio Coloma Jr. of the Presidential Communications Operations Office said a big portion of the P2.265-trillion budget is allocated for social protection and social safety nets.

“A chunk of our National Budget will go to social protection, including social safety nets for our people, especially those in the lower economic classes,” Coloma said on the state-run dzRB Radyo ng Bayan.

Coloma said that the social services part of the budget is aimed at protecting the poor from the debilitating effects of high prices of commodities, including electricity.

He added that the government continues to monitor the effects of price increases for basic services and will adopt measures to alleviate the economic burdens.

“Our economic cluster is monitoring these developments and will adopt the appropriate policies to make sure they do not add to the burden of the people,” Coloma said.

Analysis Economic recovery and presidential lethargy By Amando Doronila Philippine Daily Inquirer 1:08 am | Monday, December 30th, 2013

The Philippines ends 2013, a year plagued by nightmarish news, with its political leadership seeking refuge in complacency and short of fresh initiatives to give impetus to reconstruction plans for typhoon-devastated Eastern Visayas.

As the country enters 2014, the Aquino administration sent out a powerful but cheerless message to the nation: A yearend feel-good report describing 2013 as “a year of challenges” despite the economy posting “some of the highest growth numbers in Asia.”

The report said it was during the year that “our collective commitment to preserve and to stand shoulder to shoulder enabled us to overcome the trials set before us, thus making the world admire and respect us all the more.”

The report talked about a “remarkable year for the Filipino—one in which “the President showed indomitable will to lead the nation forward” and “where the mandate for change was renewed in the midterm elections.” The report sounded like a preview of 2014.

Obviously. It was out of place in the context of the desolation and humanitarian tragedy left by Supertyphoon “Yolanda.”

The report highlighted the claims of successes of the Aquino administration in the past three years. It was not only irrelevant to the concerns of the Filipino people in the typhoon-devastated communities but it also made President Aquino look more remote and insensitive to the sufferings of the storm survivors.

The report was issued as propaganda to make up for the slow response of the Aquino administration to the death and destruction wrought by Yolanda.

It cited the administration’s “successes”—ranging from “spurring economic growth, expanding social services, enhancing peace and security, combating corruption, and instituting greater reform in government, as well as to ensuring that our countrymen rise from the rubble of man-made and natural calamities.”

Those were mere platitudes cited in lieu of plans to push the reconstruction of Eastern Visayas.

An administration spokesperson, who seemed to be speaking of another country, made matters worse when she said in an interview on state-run Radyo ng Bayan: “It has been a year of challenges not only for the administration but also for the Filipino people.”

The spokesperson went on to say: “It has been a year wherein the foresight and prudence of the President—holding fast to the long-term vision of a more prosperous, stable and dynamically competitive Philippines—has been upheld time and again.”

The yearend report said the economy in 2013 “continued its stellar performance, posting some of the highest growth numbers in Asia.”

It cited the old hat that the country received three major credit rating upgrades during the year, followed by approved investments totaling P126.5 billion—a case of counting the eggs before they are hatched.

The report claimed a 14.58-percent increase in infrastructure spending—an increase, all right, but not big enough to boost economic growth.

The report said the economy posted five consecutive quarters of at least 7-percent gross domestic product growth. For the first three quarters of the year, GDP grew above the government’s target of 6-7 percent.

But the report ignored the finding that the growth had taken place without creating jobs, with the implication for reducing poverty.

The National Economic and Development Authority believes GDP growth will still be within target this year and in 2014.

In a press briefing on Dec. 17, Socioeconomic Planning Secretary Arsenio Balisacan said growth in 2013 would be near 7 percent. In 2014, growth would be within the 6.5-percent to 7.5-percent target set in the Philippine Development Plan.

Balisacan said he expected to implement rapidly the recovery and reconstruction of typhoon-devastated communities to help offset the probable slowdown of the economy in the first quarter due to Yolanda.

In the subsequent quarter, “we should be able to regain to the momentum,” Balisacan said.

Economic growth this year could have reached 7.3 percent to 7.5 percent had not Yolanda struck central Philippines, he said.

The impact of the typhoon on agriculture would likely slow down the economy’s growth in the first quarter to around 4.1 percent to 5.9 percent, he said.

He said the main growth drivers would be the reconstruction of typhoon-ravaged communities.

The economists are quiet about the impact of presidential initiatives as a driver of economic growth. The government’s response to calamity is a forbidden topic for public discussion.

The President went up to Baguio for a brief vacation to enable him to organize his initiatives to give the economy a fresh push.

As of Sunday, as Mr. Aquino came down from his retreat, there were no signs that he would launch any plans in the new year.

Is he ready to revitalize the devastated economy with a new found burst of energy?

The problem is that he is struggling to cast off a culture of indolence.

It’s been a year of ups, downs, but mostly ups, says Malacañang By Michael Lim Ubac Philippine Daily Inquirer 7:24 am | Sunday, December 29th, 2013


Deputy presidential spokesperson Abigail Valte. INQUIRER FILE PHOTO

MANILA, Philippines—The Aquino administration has described 2013 as “a year of challenges” despite the economy posting “some of the highest growth numbers in Asia.”

In its yearend report posted on gov.ph/featured/2013-yearend/, Malacañang said it was during the year that “our collective commitment to persevere and to stand shoulder to shoulder enabled us to overcome the trials set before us, thus making the world admire and respect us all the more.”

The report talked about a “remarkable year for the Filipino people—one in which the President showed his indomitable will to lead the nation forward, and where the mandate for change was renewed in the midterm elections.”

Deputy presidential spokesperson Abigail Valte said the infographics posted on the online Official Gazette showcased the country’s successes—from spurring economic growth, expanding social services, enhancing peace and security, combating corruption and instituting greater reform in government, as well as ensuring that “our countrymen rise from the rubble of man-made and natural calamities.”

Challenging year

“It has been a year of challenges not only for the administration but also for the Filipino people,” said Valte in an interview over state-run Radyo ng Bayan.

“It has been a year wherein the foresight and prudence of the President and his team— holding fast to the long-term vision of a more prosperous, stable and dynamically competitive Philippines—has been upheld time and again,” she said.

The infographics she was referring to were prepared by the Presidential Communications Development and Strategic Planning Office, and the Office of the Presidential Spokesperson.

“Our achievements only tell us that nothing is impossible for the Filipino people,” she said, adding:

“As the infographics put it: ‘As a nation with collective aspiration, we have many successes despite the overlapping trials we have been through. Truly: The Filipino will never succumb to any trial.’”

Asia’s rising star
Malacañang’s yearend report said the economy in 2013 “continued its stellar performance, posting some of the highest growth numbers in Asia.”

It cited the successive credit upgrades the country obtained from the three major credit rating agencies—Baa3+ from Moody’s Investors Service; BBB-stable from Standard & Poor’s; and BBB-stable from Fitch Rating—the Philippine Stock Exchange Index that reached 7,392.20 on May 15 and total approved investments worth P126.5 billion.

In government spending, it noted a 14.58-percent increase in infrastructure spending, from P257.22 billion in 2012 to P294.71 billion in 2013.

The economy posted five consecutive quarters of at least 7 percent gross domestic product (GDP) growth, “buoyed by the expansion in consumer spending, higher business and consumer confidence, favorable interest rates, stable inflation, strong inflows of overseas Filipino remittances, high inbound tourism, and an optimistic domestic economic outlook.”

For the first three quarters of the year, GDP grew above the government’s target of 6-7 percent.

The report cited Moody’s Analytics description of the country as “Asia’s rising star,” and noted that the World Bank’s “Doing Business Report” ranked the country 108th, a jump of 30 notches from 2012.

Sultan of Sulu

The country experienced some of the worst manmade and natural calamities this year.

The challenges to the Aquino administration began in February, when over 200 armed followers of the late Sultan Jamalul Kiram III engaged Malaysian forces in a two-week battle to reclaim Sabah.

The standoff claimed the lives of 68 Filipinos and 10 Malaysian security personnel, and clouded relations between Manila and Kuala Lumpur.

According to the yearend report, 3,513 e-passports had been processed for “displaced (Filipino) persons and deportees” as of November 2013.

“Qualified displaced persons from Sabah were enrolled under the modified conditional cash transfer program,” it noted.

The three-week Zamboanga standoff in September led by followers of Moro National Liberation Front (MNLF) founder Nur Misuari, who is now in hiding, cost taxpayers P3.5 billion for recovery and reconstruction efforts.

Back-to-back natural calamities started with Typhoon “Santi” which pummeled Luzon in October, followed by the magnitude-7.2 earthquake that struck Bohol in the same month.

In November, Supertyphoon “Yolanda,” the strongest typhoon to hit land, lashed Central Philippines.

Total relief assistance from the social welfare department, local government units and nongovernment organizations reached P36.50 million for Santi alone, according to the report.

The government, this year, spent for the rehabilitation of areas hit by Typhoons “Pablo”— P1.06 billion for rehabilitation and rebuilding of infrastructure damaged in December 2012— and “Sendong” which hit Norther Mindanao, the Visayas and Palawan in December 2011.

No figure was cited for reconstruction efforts after Sendong, except for “an emergency employment livelihood recovery and reconstruction project” in which “qualified beneficiaries were paid a daily wage of P215, or 75 percent of the approved minimum wage for the city.”

Mr. Aquino said his administration needed P130 billion for recovery and rehabilitation of areas devastated by Yolanda.

Social services, security

For social welfare, the administration expanded and improved health care, education and social services through conditional cash transfer (3.9 million households), PhilHealth insurance (77.86 million members), improvement of health facilities (P33 billion), sustainable livelihood program (316,426 households), classroom construction (62,336 rooms), Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services, the Sajahatra Bangsamoro Study Grant Program, and strengthened child trafficking drive.

The government and the Moro Islamic Liberation Front peace negotiation panels approved this year the three annexes to the 2012 Bangsamoro Accord: On transitional arrangement and modalities, revenue-generation and wealth-sharing, and power-sharing.


Chief News Editor: Sol Jose Vanzi

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