Equitable power shortage

Egay Uy

FROM a residential or small commercial end-user’s point of view, one may ask what could be wrong with the current set up where electric distribution companies purchase bulk power from generation companies and retail their purchases to their respective consumers.

What’s wrong with it, indeed?  If the drumbeaters in the power sector are saying that demand for electric power and energy in this part of the country is steadily rising, what is keeping capitalists from putting up power plants that will comfortably meet the demand?

Is regulation too stringent?  Do power transmission and related ancillary charges play a major role in decision making?  Has the consuming public become a victim of manipulation?  Or has the consuming public become a victim of inefficiencies?  I think the bottom line is the returns that investors are guaranteed to earn for their money.

Putting up an electric power generating plant is no joke. It entails huge capitalization with matching bankable power purchase agreements for investors in power generation to be assured of returns of their investments.  This is the reality, not to mention possible obstacles that may be put up by environmentalists and politicians.

But a layman may ask: what is the difference between putting up a huge food manufacturing plant, that also entail huge amounts in investments, and a power generation plant? Comparing the end-products of the two, that of the former may be more necessary than the latter.

But unlike their counterparts in the power industry, the food makers are not assured of returns but they have to resorts to marketing gimmicks to get their merchandise sold. Yes, power producers are assured of returns that are embedded in the rates that they agree upon with power distributors.

While everybody welcomes new investments in power generation, it may be best for the regulator to come up with a formula that will shield residential and small commercial end-users from rate hikes caused by additional huge investments in power generation (and, in like token, distribution) facilities that are necessitated by commercialization and industrialization.

That may be more equitable than what is presently being done.