DIE HARD III
Herman Tiu Laurel
11/16/2012
Iligan Light and Power Inc. (ILPI)'s majority block owner Jojo Borja, a crusader against electricity price gouging policies, pointed out how explicated the new Department of Energy (DoE) Secretary Carlos Jericho Petilla's energy sector policy direction really is.
Here's a quote from media: "He (Petilla) reiterated that even in his previous job as governor of Leyte, his proverbial appeal to its local government unit heads had been: 'There has to be a little bit of greed, but it's not in a level that will squeeze the people financially.'"
What is that level of "a bit" of greed? Is it the 12-percent Return-on-Rate Base (RoRB) prior to 2004 or the present Performance Based Regulation (PBR) rate of up to 17 percent concocted by the Energy Regulatory Commission (ERC), not to mention the 1,000-percent overprice of many components of that rate base? Or is it the 5 percent that distribution utilities (DUs) like ILPI used to make that was already enough for a decent profit?
Borja, a third generation electric power industrialist, says that under the present PBR set-up, they earn in three months what they used to earn in 12 months under the RoRB. They didn't really earn 12 percent as that was only a "cap."
Before the advent of the Electric Power Industry Reform Act (Epira) in June of 2001, regulators used to be much stricter in approving profit rates and DUs had to eke out much lower profits — but that's not bad considering the "captive market" they have.
So pray tell Mr. Petilla. What is your definition of "a bit of greed?"
Petilla argued that the "bit of greed" should be in the level that will not "squeeze the people financially" and at a level that is "sustainable." But what is that sustainable "level of greed?" Is it when Third World power rates (such as the Philippines') gain the reputation of being the "highest in Asia?" Is that sustainable?
To wit, here are some reactions to the present electric power price situation: Nora Halili, trustee of Philippine Exporters Confederation Inc., in a news report, said "Producers and manufacturers suffer… they are no longer competitive, so they go to (other) countries for an ocular inspection to determine if they can compete (from there)… The countries most favored as alternative locations were Vietnam and China, which… have lower power rates..."
Meanwhile, Marbel Bishop Dinualdo Gutierrez said, "It's not the fault of the people of Mindanao why the region is having a power crisis today… It's the government to blame because of its neglect and wrong policies that tend to favor businessmen and private investors rather than looking after the welfare of its people." That's clearly a critique of that "bit of greed" that is the rationale behind "privatization."
Last October, the Associated Labor Unions-TUCP VP Gerard Seno warned of a workers' unrest on rising electricity rates after hitting a record of P13.66 per kWh, "This… will hurt the already precarious income of workers… scares new investors from coming in… force existing businesses to close shop and transfer to other… Asian countries (whereby)… more Filipinos will be jobless."
TUCP Rep. Raymond Mendoza showed Manila Electric Co. (Meralco) residential rates hitting "an all-time high of P13.66 per kilowatt-hour (kWh) beginning August… the highest residential rate in the world surpassing… Denmark, Germany, Italy, Austria, Ireland, Japan, Belgium, and the Netherlands at 22 to 32 US cents per kWh.
Newspapers and columnists, like our friend Dick Pascual, were misled by Australian firm International Energy Consultants to report that ours is only the second highest by a distorted averaging of industrial and residential rates.
Mindanao leaders, meanwhile, had these to say: Davao del Norte Gov. Rodolfo del Rosario at the Mindanao power summit early this year reportedly "asked (Aquino III) … to review the Epira because privatization of power assets has resulted in cartels."
Rep. Daisy Fuentes in the same summit told reporters that she was dismayed by the Epira, admitting she was fooled by the "experts" or those proponents of privatization despite warnings of its "cross ownership" dangers, saying, "Yung sinabi nilang walang cross ownership, it's happening," adding that reasonable rates of electricity have not been attained.
Secretary Lualhati Antonino of the Mindanao Development Authority (MinDA) said that the Epira failed in its purpose of creating a "regime of competition" because in reality there are only a few private players in the industry.
Yet in the face of all these, Secretary Petilla argues that "the private sector has the money, but we always say also that if private sector comes in, the cost will increase?"
Already, he admits that "privatization" and its "little bit of greed" do add cost but doesn't explain that that very added cost has amounted to P1 trillion or $300 billion in Psalm (Power Sector Assets and Liabilities Management Corp.) debt that they want to charge power consumers over the next 25 years.
Mind you: That "little bit of greed," like Jun Lozada's "moderate greed," has been the undoing of this nation's welfare. More next week.
Here's a quote from media: "He (Petilla) reiterated that even in his previous job as governor of Leyte, his proverbial appeal to its local government unit heads had been: 'There has to be a little bit of greed, but it's not in a level that will squeeze the people financially.'"
What is that level of "a bit" of greed? Is it the 12-percent Return-on-Rate Base (RoRB) prior to 2004 or the present Performance Based Regulation (PBR) rate of up to 17 percent concocted by the Energy Regulatory Commission (ERC), not to mention the 1,000-percent overprice of many components of that rate base? Or is it the 5 percent that distribution utilities (DUs) like ILPI used to make that was already enough for a decent profit?
Borja, a third generation electric power industrialist, says that under the present PBR set-up, they earn in three months what they used to earn in 12 months under the RoRB. They didn't really earn 12 percent as that was only a "cap."
Before the advent of the Electric Power Industry Reform Act (Epira) in June of 2001, regulators used to be much stricter in approving profit rates and DUs had to eke out much lower profits — but that's not bad considering the "captive market" they have.
So pray tell Mr. Petilla. What is your definition of "a bit of greed?"
Petilla argued that the "bit of greed" should be in the level that will not "squeeze the people financially" and at a level that is "sustainable." But what is that sustainable "level of greed?" Is it when Third World power rates (such as the Philippines') gain the reputation of being the "highest in Asia?" Is that sustainable?
To wit, here are some reactions to the present electric power price situation: Nora Halili, trustee of Philippine Exporters Confederation Inc., in a news report, said "Producers and manufacturers suffer… they are no longer competitive, so they go to (other) countries for an ocular inspection to determine if they can compete (from there)… The countries most favored as alternative locations were Vietnam and China, which… have lower power rates..."
Meanwhile, Marbel Bishop Dinualdo Gutierrez said, "It's not the fault of the people of Mindanao why the region is having a power crisis today… It's the government to blame because of its neglect and wrong policies that tend to favor businessmen and private investors rather than looking after the welfare of its people." That's clearly a critique of that "bit of greed" that is the rationale behind "privatization."
Last October, the Associated Labor Unions-TUCP VP Gerard Seno warned of a workers' unrest on rising electricity rates after hitting a record of P13.66 per kWh, "This… will hurt the already precarious income of workers… scares new investors from coming in… force existing businesses to close shop and transfer to other… Asian countries (whereby)… more Filipinos will be jobless."
TUCP Rep. Raymond Mendoza showed Manila Electric Co. (Meralco) residential rates hitting "an all-time high of P13.66 per kilowatt-hour (kWh) beginning August… the highest residential rate in the world surpassing… Denmark, Germany, Italy, Austria, Ireland, Japan, Belgium, and the Netherlands at 22 to 32 US cents per kWh.
Newspapers and columnists, like our friend Dick Pascual, were misled by Australian firm International Energy Consultants to report that ours is only the second highest by a distorted averaging of industrial and residential rates.
Mindanao leaders, meanwhile, had these to say: Davao del Norte Gov. Rodolfo del Rosario at the Mindanao power summit early this year reportedly "asked (Aquino III) … to review the Epira because privatization of power assets has resulted in cartels."
Rep. Daisy Fuentes in the same summit told reporters that she was dismayed by the Epira, admitting she was fooled by the "experts" or those proponents of privatization despite warnings of its "cross ownership" dangers, saying, "Yung sinabi nilang walang cross ownership, it's happening," adding that reasonable rates of electricity have not been attained.
Secretary Lualhati Antonino of the Mindanao Development Authority (MinDA) said that the Epira failed in its purpose of creating a "regime of competition" because in reality there are only a few private players in the industry.
Yet in the face of all these, Secretary Petilla argues that "the private sector has the money, but we always say also that if private sector comes in, the cost will increase?"
Already, he admits that "privatization" and its "little bit of greed" do add cost but doesn't explain that that very added cost has amounted to P1 trillion or $300 billion in Psalm (Power Sector Assets and Liabilities Management Corp.) debt that they want to charge power consumers over the next 25 years.
Mind you: That "little bit of greed," like Jun Lozada's "moderate greed," has been the undoing of this nation's welfare. More next week.
(Watch GNN's HTL show, GNN Channel 8, Saturdays, 8:15 p.m. to 9 p.m., 11:15 p.m. and Sunday 8 a.m., and over at www.gnntv-asia.com on "Bangsamoro Realities" with Gov. Al Tillah and Prof. Antonio Pangilinan as guests; tune in to 1098 AM radio Tuesday to Friday, 5 to 6 p.m., and visit http://newkatipunan.blogspot.com)
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