The human face behind this country’s power woes

In 2013, Philippines ranked 9 and Singapore 11 in installed generating capacity regionally but how come Philippines has the highest priced electricity within the region?  According to the ADB

The reasons for the high electricity tariffs in the Philippines are complex. The archipelagic nature of the country makes building and maintaining power grids expensive. The main reasons for the high cost relate to sector mismanagement, particularly the building of the 2 billion Bataan Nuclear Power Plant that was subsequently mothballed partly due to safety concerns; and the many onerous take-or-pay contracts with IPPs that created the overcapacity. Other factors include the extensive use of foreign currency denominated loans, coupled with currency mismatch since revenues are paid in Pesos and the Peso depreciation; corruption; underutilization of capacity; and high technical standards.

Despite the high electricity tariffs, they continue to be below actual cost of electricity supply. As a result, higher tariffs are necessary to reduce the debt burden on the Government and avert a major fiscal crisis. The power sector accounts for as much as 40% of the Philippines’ public debt. Corruption is perceived to have infected the power sector.

Further to this, and according to the KPMG report,

Meralco’s average retail tariffs are ranked ninth highest in the world and the second highest in Asia (next only to Japan, who ranks 1 in installed generating capacity globally).  The biggest component of this tariff is the generation component, at 65 percent of the overall retail tariff.  This reflects the blended costs of supply from its independent power producers (IPPs), its transition supply contracts (TSCs) with the National Power Corporation (NPC), and the Wholesale Electricity Spot Market (WESM), and its costs for ancillary services.

via KPMG
via KPMG

Among the islands, Mindanao and Visayas are worse hit by frequent brown outs.  The top producers in both these areas are publicly-owned, NPC/PSALM.

player market share per grid, via KPMG
player market share per grid, via KPMG

Surprisingly, households are the biggest consumer of electricity (although one has to understand that many residentials in the countryside are still without electricity).

Therefore Meralco’s sudden power rate hike which was questioned by it’s consumers in Metro Manila is a legitimate concern that the company should sincerely look into.  Investigations by media (such as this) yielded surprising information which, taken with previous studies from credible institutions such as the ADB, should prompt the government, the DOE, to urgently address as a matter of public interest.  What is behind these increases (not to mention continued and frequent brown outs and generally poor quality installations and service)?  The consumer-public has the right to know and address of their concern, but if the seller, the business owner, refuses to, the regulating body, the government, is accountable to act. It’s refusal to step in as regulator, in the matter of public interest, and when the public continues to suffer from the wield of private enterprise, only exacerbates public perception of corruption in (what with the still unresolved PDAF Scam) and failure of government to act in the best interest of the people.

There is no limit to the justifications one could spin when one doesn’t want to act.  The opposite of this is, there is nothing in the world that will keep you from the thing you want so much to have.  You will always make a way.

A just society is when private enterprise and government remind themselves of the human face behind the suffering, such as these persistent power woes. The human face is the necessary brake on private enterprise’ boundless imagination of profit and government’s caving in to the temptation of doing nothing, or securing private gains out of everyday transactions with the people.

What does it mean when poor communities in this country do not have electricity?  This video from Every Mother Counts presents the grave danger the situation puts pregnant women and unborn children in.


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