Why Filipinos pay highest power rates

LIFE’S INSPIRATIONS: “… For the message of the cross is foolishness to those who are perishing, but to us who are being saved it is the power of God…” (1 Corinthians 1:18, the Holy Bible).

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WHY FILIPINOS PAY THE HIGHEST POWER RATES IN THE WORLD: Here is one view on why we, Filipinos, pay one of the highest power rates in the world coming from a regular contributor in this column, Mr. Marcelo Tecson, a former comptroller of Petron Corporation:

“If we have the highest power rates in the region under the Electric Power Industry Reform Act (EPIRA) of 2001 (or Republic Act 9136), then we should not believe the glowing account about this law—that it will yield low power rates; that its mandated privatization and deregulation of power generation is the way to go; that it is not wrong per se, what is wrong is its implementation, and so on.

“There are things that do not need experimentation for us to know the result. We need not experiment further on EPIRA to know that its promised competition in the deregulated power generation oligopoly will not come about.

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MONOPSONY AND MONOPOLY IN ELECTRIC SUPPLY: “Under existing conditions in the power industry, we should already know that perfect competition in power generation is a wishful fantasy in the monopsony where the monopoly Meralco operates—as lone buyer and reseller of a basic necessity needed on a daily basis by mass consumers in its captive market.

“Its being a lone buyer makes genuine competition impossible among power generators, especially if it owns or co-owns some power generation companies that compete with other power generators. Definitely, it will give special treatment to its affiliated power producing companies, to the detriment of competition.

“Status quo is not an option. Perpetuation of high power rates under EPIRA cannot be condoned. We have to find solutions to our present abnormally high power rates. We have to revisit the issue of regulation versus deregulation in the power industry.

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GOV’T REGULATION IS NECESSARY: “Resolution of the age-old issue of regulation versus deregulation, together with the corollary issue of privatization, cannot be left to economists alone, because while they can think of economic solutions, they can miss out on the best ways of instituting the solutions. This was what happened in the defective privatization of MWSS, or the Metropolitan Waterworks Sewerage System.

“In theory, everything seems to be all right. Years ago, in the annual conference sponsored by Asia Society and Dow Jones in Manila on February 24-26, 1999, the economist who misapplied his own preaching, Stanley Fischer, the then first deputy managing director of IMF, said it in a way probably no one could have expressed it better.

“He said: `The choice is not between open markets and government control, but rather to ensure that in the context of generally open markets, government regulation and supervision are appropriate, effective and efficient’…”

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