The Misamis Oriental Provincial Board is asking the national government through the Power Sector Assets and Liabilities Management Corporation (PSALM) to defer the privatization of the STEAG State Power Inc. Independent Power Producer Administration (IPPA) contract for its Power Plants 1 & 2.
“This move of PSALM is untimely, inconsiderate and bereft of any consultation of those who will be affected in the process,” reads a portion of Resolution No. 240-2015 authored by Vice Governor Jose Mari G. Pelaez and co-authored by Board Member Emmanuel S. Mugot, chair of the SP’s energy committee.
The resolution was passed unanimously with no objection by the provincial board during its regular session last September 7, 2015.
The board invited several resource persons from the province’s power distributors Misamis Oriental Rural Electric Cooperatives 1 &2, the Association of Mindanao Rural Electric Cooperatives (AMRECO) and consumer groups like Konsumanteng Kagay-anon, Inc. (KKI) and Power Alternative Agenda in Mindanao Inc. (PALAG-Mindanao) to share their experience and perspectives on the planned privatization.
Both power distributors related their adverse experiences with the recent privatization of the Mt. Apo Geothermal IPPA which resulted in a rate impact of more or less sixty centavos per kilowatt hour to the electricity bills of residential consumers in their service areas.
Edna Diango, Moresco-1 institutional service manager, said the utility was getting an allocation of 10 megawatts of power from Mt. Apo through PSALM for the blended rate of only P3.00 per kilowatt hour (kWh) prior to privatization. After FDC Misamis won the IPPA privatization bid, they were lucky to be able to secure the same allocation through a bilateral contract with FDC but which now costs them P5.40 per kilowatt hour, or an 80 percent increase over the previous rate.
“Another effect was the decrease in our allocation from PSALM from 52 MW before Mt. Apo’s IPPA Privatization to only 39 MW at present,” Ms. Diango added. “In addition to the 13MW of the cheap power we lost from PSALM, we are projecting a similar loss of another 14 MW from PSALM if and when the IPPA privatization from STEAG pushes through.”
Pelaez said the STEAG-IPPA privatization should only proceed when the power situation has already normalized with the coming online of new capacities in two to five years to guarantee true competition between power producers and shield consumers from any untoward increase in power rates like what has already happened when PSALM sold its Power Barges 117 and 118 in 2010 which resulted in disastrous rotating brownouts all over Mindanao and again with the Mt. Apo Geothermal IPPA privatization with its 80 percent increase in power rates which has only benefitted a certain number of consumers, compared to the previous regime where its output was enjoyed by all 27 electric coops and 4 private utilities in the Mindanao mainland.
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