Drastic drop in power rates seen

By Limuel S. Celebria

Iloilo City’s power consumers should expect a drastic drop in their already reduced electricity bills beginning the next billing cycle.

This after local franchisee and distributor MORE Electric and Power Corp recently turned on its 69KV switching station at Brgy. Banuyao, LaPaz which directly connects MORE’s distribution lines to the Visayas Grid managed by the National Grid Corporation of the Philippines (NGCP).

Previously, MORE’s supply-source has been tethered to power generators Panay Energy Development Corp (PEDC) and Panay Power Corp (PPC) – subsidiaries of Global Business Power Corp. About seventy (70%) percent of MORE’s supply comes from GPBC.

It will be recalled that MORE’s predecessor, Panay Electric Company (PECO) used to have an interlocking directorate with then Lopez-owned Panay Power through a sweetheart arrangement where PECO surrendered 30 percent of the company shares to PPC in exchange for also 30 percent shares of the coal-fired plant. The two firms also had a 25-year power supply agreement.

The rest of MORE’s supply are tapped from Cebu-based KEPCO-SPC Power Corp. and Aboitiz Power Renewables Inc. as well as other suppliers in the Visayas grid through the PSALM, Wholesale Electricity Spot Market (WESM). Tapping the spot market – an opportunity the previous distributor seldom took advantage of – allowed MORE to lower electricity rates in the city by at least a peso per kilowatt-hour.

A Daily Guardian report said: “In its initial phase of operations, MORE Power was able to bring down the average residential rate from P11.31/kWh to P10.15/kWh, or a P1.16/kWh decrease in the average electricity rate in just 12 months. In April, MORE Power’s P10.28 per kilowatt-hour (kWh) charge is way lower than Central Negros Electric Cooperative or CENECO (P11.11 per kWh) and Visayan Electric Company or VECO (P11.94 per kWh) Residential consumers will continue to enjoy lower rates in May at P9.726/kWh against P10.277 in April.”

By migrating entirely to the grid, MORE Power President and Chief Operating Officer Roel Z. Castro sees the further slippage of power rates in favor of consumers. Castro noted that there are power plants in Luzon and Visayas that have excess capacity that they can supply to Iloilo City. They are all connected to the grid but they cannot all be tapped if the opening available is only at 30% capacity.

By constructing the Banuyao switching station attaching More’s distribution system to NGCP and the Visayas grid, the new power distributor has virtually cut the umbilical cord that enslaved PECO to its favored suppliers. The full migration to the grid allows MORE to source power from the many suppliers therein and find the lowest available cost through bidding.

This virtual declaration of independence from its previous supplier is not without its perils, however. For sure, the grid is not without its flaws where a hiccup in one system could cause a major ripple in another. Two years ago, in October 2019, a rip in the 138 KV cable linking the Panay and Negros grids plunged the whole of Panay and Guimaras into darkness for some 16 hours. Late last year, as well, Panay suffered a 10-hour brown out the reason for which the NGCP was unable to fully explain. It must be noted that Panay is located on the fringe of the Visayas grid. It will be the first to suffer in case of shortage or fluctuation of supply to the grid.

Should reliability in supply suffer in favor of rate reduction?

There’s that, of course. But the benefits – a considerable drop in power cost for consumers – far outweigh the risks.

Disruptions to the grid have come few and far between and mostly in the form of force majeure or natural causes. Meaning, there’s nothing one can do to prevent such.

On the other hand, what if a supplier’s power plant went kaput for whatever reason?  Like most shrewd businessmen, MORE is not putting all its eggs in one basket. MORE will be forging supply contracts who three or more suppliers on a calibrated basis so that it does not become totally reliant on one.

The ideal situation, of course, is for PPC and PEDC to participate in the bidding and win. That way, we can enjoy lower rates and reliability, said Castro.