DOE addresses Mindanao’s higher power rates

By Myrna M. Velasco – November 27, 2016, 10:01 PM

from Manila Bulletin

With the grid’s supply source diverting massively from traditionally cheaper hydro, Energy Secretary Alfonso G. Cusi is now sorting out solution to Mindanao’s dilemma over relatively pricier power rates.

In his message to the Association of Mindanao Rural Electric Cooperatives (AMRECO), Cusi indicated “we may be facing this time novel issues concerning pricing and competition.”

He added that from the years of blackouts that plagued Mindanao, the circumstances had so far changed – that the supply issue now conversely tilts on “excess generation.”

For this, the energy chief noted that his department is “looking into the possible implementation of an electricity market in Mindanao.” He previously sounded off to media that he wants this accomplished around June 2017.

With teeming supply, industry players in Mindanao have been noting that “pricing war” will ensue – and that the downward pressure on costs will turn out beneficial to consumers.

Cusi stressed that the proposed Wholesale Electricity Spot Market (WESM) could “promote competition and provide a level playing field for the stakeholders.”

The energy chief opined “this will not only ensure the constant availability of electricity to the consumers, but will also foster a more competitive market that will bring in more investments.”

He stressed this is in line with President Rodrigo Duterte’s “twin priorities of fully addressing the power situation, and at the same time, pumping more economic activity and creating more jobs and livelihood.”

Firstly though, the Department of Energy’s first attempt had been to address the bid of marginalized electric cooperatives in Mindanao for cheaper source of power – preferably the same to what they have had before on generated electricity from Agus and Pulangui hydro plants.

Cusi said the plan is to allocate capacity for them from the Agus-Pulangui generation so they can be spared from the deemed “higher blended rate” for Mindanao grid, apparently pushed upwards by the comparatively more expensive coal plants.

“We’re changing policy on how it is allocated. The DOE made an issuance to PSALM (Power Sector Assets and Liabilities Management Corporation) to redirect to the poorest of the poor of the communities in ARMM (Autonomous Region in Muslim Mindanao),” Cusi said.

The rest, he added, “will be directed to PEZA (Philippine Economic Zone Authority) so that we can encourage investments in Mindanao that will enable us to compete against our neighbors… offer it to the manufacturing companies.”