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LKI 57th Press Statement
DECEMBER 4, 2019
LABAN KONSYUMER CALLS FOR ERC SWIFT APPROVAL OF SAVINGS OF 40 CENTAVOS PER KWH ON NEW POWER SUPPLY AGREEMENTS
In light of the series of hearings by the Energy Regulatory Commission or ERC, consumer group Laban Konsyumer Inc. submitted its December 2, 2019 Motion and Manifestation in the matter of the petitions of Meralco for approval of power supply agreements (PSAs) with Phinma Energy Corporation, South Premiere Power Corporation, First Gen Hydro Power Corporation and San Miguel Energy Corporation.
LKI President Vic Dimagiba noted that a total 1,700 MW of power are needed by the Meralco to continuously supply electricity in their franchise area before the end of year 2019 and thereafter. He stated “we have still been experiencing yellow and red alerts in November, which is a telltale sign that we need to secure adequate power capacity to meet the growing demand of the grid, especially with so many power plants going on outage even in the Ber-months. The need for additional electricity is of utmost urgency and importance to our economy.”
LKI also noted the total savings from all the petitions is the amount of PHP 0.4008 per kilowatt hour, an amount that will be passed on to the benefit of the consumers immediately. The group said “If the regulator acts on these PSAs as soon as possible, this will mean that consumers will not be burdened by high power rates, which have been brought about by power plant outages and high power generation costs. The more supply of power our country has, the laws of supply and demand show that prices and costs will go down.”
Dimagiba pleaded the Honorable Commission to evaluate the disclosures on savings per kilowatt hour and on the supply reliability swiftly and promptly and “the possible cost implications of these PSAs must be confirmed and evaluated as we speak, since this may have a major impact on consumers. It would truly be great Holiday news for customers if their cost of electricity will go drastically down as promised by these PSAs. We at LKI definitely look forward to that.”
LKI, subject to the rules of the Honorable Commission and for the reasons stated, interposed no objection to the prayer for the issuance of a Provisional Authority, as this will immediately redound to lower electricity rates in the franchise area of the distribution utility. The group declared “we hope that the Provisional Authority will already be granted so that we consumers can enjoy the lower power prices this Christmas and for the year to come. We will also be assured of higher and more efficient energy reliability and lowest cost possible.”
In a statement last month, LKI also commented on the ERC proposal to amend the Secondary Price Cap mechanism of the WESM, consumer group Laban Konsyumer Inc. (LKI) called for the fast-tracking of PSA approvals, to boost power supply as soon as possible, amidst thinning energy supply situation. The group also demanded results to be revealed regarding the ERC investigation of collusion among generation companies.
During the public consultation, LKI President Vic Dimagiba stressed the importance and urgency of a faster and immediate PSA approval by the ERC. This was responded to by Commissioner Catherine P. Maceda committing to the PSAs being approved within the year, by December.
Dimagiba said “this is encouraging news hearing that the ERC will already act on the PSAs within the year, because this will mean additional power capacity to the grid as soon as possible. We hope that ERC will live up to its promise and commitment to already act on the PSAs and approve this much-needed capacity for the grid. This supply is important because this will mean reliable power at low costs. This current power crisis we are experiencing tends to raise prices, on top of causing brownouts and blackouts.”
Commissioner Maceda also said that there is another measure that ERC is finalizing on reliability performance standards of plants. Dimagiba stated that “currently, there are power plants being forced to go on outage because of their age and inefficiencies. If we can fast-track the PSA approvals, this will mean more advanced, healthier and newer power plants online, and more dependable capacity for the consumers at lowest cost possible.”
The group said regarding the public consultation that “At most, the secondary price cap, whether in its current form or as proposed by the ERC, will just defer costs that will be paid by consumers. The rules still allow generators to ask for additional compensation if they were allegedly affected by the secondary cap. Any additional compensation will simply be recovered through future WESM charges and customers will still pay for unreasonable and persistent WESM price spikes. That is why we must fast-track the PSA approvals and begin building new power plants immediately.”
LKI President Vic Dimagiba then explained the urgency for fast PSA approvals, by highlighting how “The best way to mitigate increases in spot market prices is to ensure: (i) entry of additional supply and (ii) the reliable operation of power plants. That is why we must fast-track the PSA approvals.”
The group explained that “Additional generation capacity brings two benefits: (i) lower prices through a more competitive market and (ii) a more reliable grid, as it will be less vulnerable to outages by one or two power plants.”
Dimagiba pointed out how “New laws and rules were introduced because the government wants to cut red-tape, including those blocking power plant development. As is, our power supply situation is extremely thin and we are already delayed in our additional capacity timeline. We need these new laws and rules… Examples are the EVOSS Law, ARTA, etc. The main implementing agencies of the power sector, DOE and ERC, should lead by example by cutting their own red-tape and expediting the entry new power plants.”
Dimagiba stressed that “Reliable electric service starts with reliable power plants. A lower secondary price cap will not protect consumers from brownouts if multiple power plants go out simultaneously.”
He went on to question “Where is the ERC’s promised report on the Yellow and Red Alerts that plagued the Luzon Grid last summer? Despite demand coming down after summer, the Luzon Grid still experienced two more Yellow Alerts in October and another one just last November 4. Which power plants went out repeatedly and caused the Alerts? Are they going to be penalized? Where are the results of the ERC’s investigation on collusion among the generation companies?”
LKI demands that consumers deserve to know the results of the collusion investigation, because for all we know, there is collusion going on and the generation companies are robbing people of their hard-earned money. The consumer group reiterated their call for quick action and immediate results.
Dimagiba concluded by saying “aside from cutting red tape both agencies should work together instead of engaging in their own internal intramurals to the detriment of consumers.”
For any inquiries or concerns, you may reach LKI President Vic Dimagiba at 0917-812-5546. Visit our updated website at www.labankonsyumer.com and like us on Facebook and Twitter. Send any inquiry to labankonsyumer@gmail.com