Here’s a newspaper article entitled “Big Power Users Back Open Access Sheme” No kidding?
The President has, reportedly, enlisted the assistance of former Energy Secretary Vince Perez “to explore the possibility of implementing open access without amending the Electric Power Industry Reform Act (EPIRA) of 2001.”
This seems like a good idea to me – to have Vince look at this. I don’t know him nor have I worked with him (he was Secretary during the precise period I was out of the country) but from what little I know, this is probably a good selection and a good approach at finding a helpful change. I also firmly believe that anything that can be accomplished with well-implemented competitive markets can be accomplished in well-implemented other ways. They all have their implementation risks.
But … there’s no free lunch. Take a look at the ecosystem we’re dealing with:
This is a thought experiment to try to identify what the real issues are here.
What you take away or give to one participant – in the above ecosystem – is seen as an equivalent counter-impact to the other participants, since money is presumably not leaving or entering the circle any other way. (Am I missing something?)
Let’s say the Generators, as a group, are operating at a certain level of margins (or profits) now and we make a change that allows the Large Power Users to see an X peso benefit. For simplicity let’s assume total load doesn’t change (but it’s likely to go up because of the relative price elasticity of demand between industrial and non-industrial loads). One of two things will happen: either (1) the Generators see reduced margins or (2) the Non-Large Users see an increase in costs. So guess who gets hit!
Frankly, I think there is something else going on here. But we can’t get to that issue until someone can demonstrate that there is not a one-to-one counter-impact between Large and Non-Large users. Let’s start there.
How could the Non-Large Power Users get increased costs? Well, one potential way is that if Napocor cannot participate, this could alter the Napocor dispatch such that it will have to increase it’s regulated cost recovery from the non-open access customers?
In summary, what we’re talking about in early open access for Large Users is finding a way to benefit customers representing less than 25% of electricity sales. (Meralco kWh sales to all Industrial customers are about 25%. The ratio Luzon-wide and country-wide for “heavy users” must be quite a bit smaller). But it’s an important 25%. The question is: Will it hurt the residential and commercial customer? And if so, by how much? Is it a palatable impact?
The biggest at-risk sector is the rural electric cooperatives (ECs) since they are mostly residential load and source their supply primarily from Napocor. What’s their take on this? Have they studied this in a quantifiable way?
[Disclosure: Much of my current work is coming from the EC sector]