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1st Phil Clean Energy Summit

The blackout threat is real

Malacañang has joined the ranks of rabble rousers in the guise of protecting the public interest. It quickly dismissed the warning of Manila Electric Co. that rotating brownouts would occur by March, the start of the dry season, if rates remained at their current levels, without a clear understanding of the supply and demand situation.

Presidential Communications Operations Office Secretary Herminio Coloma scored brownie points for Malacañang when he said the government would not allow brownouts to occur as warned by Meralco.

“The electric power industry is imbued with public interest. Public interest dictates that electric service be provided continuously and without unjustified interruption,” Coloma said. The Malacañang official added the government was ready to take the necessary action to protect the interest of the public amid the threat of rotating blackouts as well as reports of collusion between Meralco and power producers to raise electricity rates.

Coloma was obviously referring to the power of the government to take over the operations of Meralco, if the company failed to dispatch power to the Luzon grid. The option, while laudable, should be only be done as an extreme measure and only if collusion among the power generator and retailer was firmly established.

Pending the decision of the Supreme Court on the fair level of rate increase in December, the government must educate the public about the complexity of electricity pricing and now allow market forces to dictate the rates after December, when they unusually shot up. Electricity rates could go up or down, depending on what source of electricity is available in a given month.

Meralco cannot be forever stopped from adjusting its rates, either downward or upward, because the price of power it buys fluctuates. Neither should its rates be capped because consumers would be short-changed when the prices could be lower than the ceiling imposed by the Supreme Court.

The onset of the dry season, meanwhile, will restrict the capacity of hydro power plants to supply Meralco with cheaper electricity. The retailer, in turn, will be forced to buy higher electricity prices from non-hydro producers like coal- and oil-fired plants and pass on the added rates to consumers.

Meralco can reduce its purchases and allow the Luzon grid to suffer brownouts, if it is forced to pass on the rates at lower levels. Consumers, however, may not like the idea of paying lower rates in a dim light.

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