13 AUGUST 2012
NGCP defends plan to acquire Panay lines
SYSTEMS OPERATOR National Grid Corporation of the Philippines (NGCP) yesterday confirmed that consumers will have to pay a P1-per-kilowatt-hour (kWh) charge when it buys transmission assets on Panay island, but argued that this may be offset by a foreseen drop in power costs.
“There will be an increase of a maximum of P1/kWh due to transmission charges, [but] the per unit recovery of transmission asset will decrease [while] the generation charge will possibly be lower because they can choose a supplier apart from PEDC (Panay Energy Development Corp.),” NGCP Spokesperson Cynthia P. Alabanza told reporters yesterday.
Earlier, Ms. Alabanza denied that prices will increase and said rates will be lowered instead.
She listed two factors that could cause overall power prices to fall after the company acquires the PEDC assets.
“The first factor is recovery charge, [which] is supposed to be charged by PEDC from PECO (Panay Electric Company Inc.). If we purchase the asset, the Energy Regulatory Commission (ERC) will carve out the recovery charge, transfer it to NGCP but it will be spread across the Visayas grid so it will decrease,” she said.
“Second, transmission charge… will increase because the customers will now pay a P1/kWh transmission charge. But another factor is that consumers of power distributor PECO will then have the option of sourcing electricity supply with lower generation charge from sources other than PEDC, including the wholesale electricity spot market (WESM),” she added.
PEDC, a generation company, is connected and currently supplying power to the grid through NGCP’s Sta. Barbara Substation. PECO is the only distribution utility in Panay island that is not connected to the grid.
Ms. Alabanza clarified that if PECO continues to get its power needs from PEDC, definitely prices of electricity in the areas will increase if the distribution utility (DU) will not manage its power sources.
“Through a mix of bilateral sources and WESM (Wholesale Electricity Spot Market), I cannot guess how much lower, but in theory, it is possible that electricity costs will be lowered and the P1/kWh transmission charge will be offset,” she explained.
Last week, Senator Franklin M. Drilon had filed with ERC a 27-page opposition against NGCP’s plan to purchase P620 million worth of transmission assets of the PEDC, which include a switchyard, transformers, power circuit breakers, transmission line, and a microwave system.
Read article source in Business World Online