Excess power supply expected to moderate electricity rates

The Philippines is now experiencing an ‘oversupply situation’ in the power sector which is expected to last five to seven years, a top executive of Aboitiz Power Corp. said Thursday.

“Based on our analysis, we are in an oversupply situation, which is a common theme in the Luzon, Visayas, and Mindanao grids for the next five to seven years,” Aboitiz Power president Antonio Moraza said in the company’s internal paper

He said an oversupply would be good for the consumers as the improved supply situation led to low selling prices at the Wholesale Electricity Spot Market and open access regime.

“However, this poses tremendous pressure on private power players. Competition is very tough, prices are declining resulting to lower margins. Our generation and distribution groups continue to look for ways to improve efficiency, reliability and availability. We simply have to compete smartly by being the best operators in this low-margin environment,” Moraza said.

He said Aboitiz Power aimed to have 4,000 megawatts in net attributable capacity by 2020.

“As of end 2017, we are almost 3,000-MW strong and, this year, we expect to add 536 MW more into our generating portfolio with our hydro plants Maris Canal and Manolo Fortich plus our baseload plants Pagbilao 3 and Therma Visayas coming online,” he said.

“Based on our project pipeline, we are confident that we will hit our 4,000-MW goal by 2020,” he said.

Moraza said open access, which gives customers the power to choose suppliers, remained a big challenge but “our  portfolio has given us a distinct advantage alongside the relationships we have built with our customers.”

“Our distribution group is, likewise, riding on the economic growth of their franchise areas. We are constantly looking for ways to improve how we are doing things so we can serve our customers better,” he said.

Moraza said that being an essential utility, “we expect public and government focus and scrutiny, we must continue to operate responsibly and be conscious of the impact we have on people and environment”.