Competition for the benefit of consumers

The Taguig Regional Trial Court (RTC) recently dismissed the injunction plea of the Malampaya consortium on Meralco’s Competitive Selection Process (CSP), paving the way for power supply bidding activities to resume for the long-term benefit of consumers.

As expected, the recent turnout of Meralco’s CSP for 600 MW of power supply proved critics wrong as the utility managed to secure various competitive offers, highlighting the effectiveness of the bidding process in securing the lowest rate possible.

Competition after all is always good for consumers.

To emphasize the effectivity of the recent CSP – the best bid for the 600 MW supply came from Masinloc Power, which offered a rate of PHP5.60 per kWh for 500 MW of the energy requirement, and GN Power Dinginin, which offered a rate of PHP5.7392 per kWh for the remaining 100 MW, both of which already include value-added tax (VAT) and line rental fees.

These bids are highly competitive, especially since Meralco revealed that these are even lower than current billings from its supplier First Gas, for their Sta. Rita and San Lorenzo Plants, which were at the PHP7 range (which do not yet include the VAT). The rate difference, of course, translates to consumer savings.

Clearly, the CSP proved itself to be effective in advancing and protecting consumer interest. The winning bids will still be evaluated by the Energy Regulatory Commission (ERC) and hopefully, these will be implemented in a timely manner to ensure that consumers will benefit from sufficient and stable electricity service at a fixed cost.

Sadly, the long-term benefits of the CSP to consumers and our economy are often overshadowed by unnecessary criticism and even obstructions that only endanger the country’s energy security goals and power supply situation.

By its very nature, the CSP (which is mandated by the government) is designed to protect and promote consumer interest to ensure that they get the needed power supply at the least cost possible.

The CSP has proven itself, time and time again, to be an effective mechanism for consumers to get a guaranteed stable power supply without the risk of fluctuating prices for many years. This, in effect, minimizes consumers’ exposure to the spot market, where prices are known to be highly volatile.

This is highly important given that Filipino consumers are mainly concerned about inflation or rising consumer prices and this concern is the same for their power supply. When one talks about electricity service to the ordinary Filipino consumer, the main concern is if there is electricity service and how much or their power bill – both of which are protected by the CSP.

From the economic standpoint, the CSP helps advance energy security – a crucial factor in sustaining and accelerating our country’s economic growth trajectory. By ensuring the availability of power supply at a fixed and cheap cost, economic activity is also sustained if not accelerated.

This is critical for areas serviced by Meralco – the majority of which are economic and industrial hubs. Metro Manila alone, for example, accounts for 36 percent of the country’s gross domestic product, which means that affordable and stable electricity supply is a requirement.

It must be emphasized that given the economic growth targets of the government, energy security is a crucial factor that cannot be threatened or risked. The Philippines needs a stable and sufficient power supply at an affordable cost to accelerate economic growth and spur greater economic activity.

President Ferdinand R. Marcos Jr. himself has included energy security in his administration’s priority socioeconomic agenda, which only shows how critical power supply is.

Moving forward, let us be conscious of the reality that efforts to obstruct the CSP only hurt consumers’ pockets and threaten economic growth. The CSP is already a working process that advances the interest of the consumer and helps propel economic growth.

Editor’s note: The opinions expressed in the foregoing article are solely the author’s and do not reflect the opinions and beliefs of the Philippine News Agency (PNA) or any other office under the Presidential Communications Office.