Power producers urged to lower electricity rates

March 29, 2020 | 6:32 pm
from Business World

A CONSUMER GROUP on Saturday urged power producers to reduce the cost of electricity as power demand and prices continue to drop during the Luzon-wide lockdown.

In a letter sent to the Philippine Independent Power Producers Association, Inc. (PIPPA), Laban Konsyumer, Inc. (LKI) noted that the power demand and supply gap dropped 50% during the enhanced community quarantine, which can be treated as a “force majeure” event.

“(I)t is a difficult situation nowadays for the Filipino consumer, especially when it comes to making money, since most people are not able to work any longer. Because of this, our group is calling on the owners of the power plants to find a way to lower the power generation costs that they will be passing on to consumers,” LKI President Victorio A. Dimagiba said in the letter posted on the group’s website Saturday.

The group urged power generation companies “to avoid stranded cost(s) or refuse fixed costs that will be shouldered by customers” in their contracts with distributors.

The Department of Energy (DoE) reminded generation companies on March 26 that they cannot shut down their operations despite energy demand falling by around 30%.

“A decline in power demand does not mean that operations could and should be put to rest,” Energy Secretary Alfonso G. Cusi said in a statement.

Meanwhile, LKI said distribution utilities and electric cooperatives, which obtain their electricity from supply agreements and independent producers, would not invoke a force majeure provision on their supply contracts to pull down contract capacity or minimum charges because it might affect their income.

On Friday, Power Sector Assets and Liabilities Management Corp. said it will not allow the suspension or lowering of the minimum energy off-take or the so-called minimum charges by distribution utilities unless there is a declaration of force majeure.

Earlier, Manila Electric Co. extended the due date of its customers’ payments of bills falling from the quarantine period by 30 days from April 14, in compliance with the DoE’s order to provide relief to consumers affected by the lockdown.

The Energy Regulatory Commission also suspended feed-in-tariff allowance collection, effectively cutting the electricity rate by P0.04 per kilowatt-hour in the next billing cycle.

“These are emergency times, and desperate measures must be undertaken to keep ourselves afloat. With this low demand for power, one good outcome of all this chaos can be the lower generation rates being paid to the big power plant owners,” Mr. Dimagiba said.