Power spot market price spike anomaly?
An unexpected surge of electricity prices brought about by high charges in the Wholesale Electricity Spot Market (WESM), has resulted in increased generation charges. This prompted consumer advocacy group CitizenWatch Philippines—where I am convenor—to ask the Energy Regulatory Commission for an investigation. Specifically, we asked the ERC for a probe on these spot market price spikes during the lockdown months. No “yellow” alerts, or public warnings on thinning power supply, were issued......»»
Fools in suits
When a ranking Department of Agriculture official was asked in a recent Congress hearing what steps the agency had taken to break the rice cartel, he replied that he did not believe that a “mafia” existed. Coming from a high DA official, the statement revealed that nothing was being done to stop the syndicate that everyone in the industry knows about since, to the authorities, it does not exist. In the reenacted Anti-Agricultural Smuggling Act of 2016, smuggling, hoarding, profiteering, and forming cartels for agricultural and fishery products are considered economic sabotage and are non-bailable offenses for which a long jail term could be meted out. The strengthened law, however, lacks strong teeth against government officials who are in cahoots or protect the syndicates. Contained in the proposed bill is a provision indicating that any government officer or employee found to be an accomplice in the commission of the crime will “suffer the additional penalties of perpetual disqualification from holding public office, exercising the right to vote, from participating in any public election, and forfeiture of employment monetary and financial benefits.” The bill is pending in both houses of Congress. With the slow grind of justice in the country, a public official looking for a fast buck will not hesitate to risk his job in exchange for a huge payback. The recent series of events showed the markets are being manipulated by the big players in the sugar, vegetable and rice businesses. These syndicates are known to be deeply entrenched due to their connections with government bigwigs who facilitate their domination of the markets either through edicts or the use of public resources. In the most ridiculous situation, the recent spike in onion prices was found to be artificial since farmers were even throwing away their harvests because of low farmgate prices, thus there was no reason for prices to surge. Later, it was exposed in a congressional hearing that a cartel had succeeded in manipulating the onion market to create a condition that would require its importation, from which its members would make a killing. The warehouse and storage facilities are controlled by the mafia which makes it easy to create artificial conditions to which the market reacts by raising retail prices. The ultimate goal is to coax the government to allow importation from suppliers in overseas markets that are also flooded with the commodity, The cartel rakes in profits from both the high markup and the kickbacks from the overseas suppliers desperate to sell their surplus. The woeful victims are the Filipino farmers whom the cartel boxes out of the market. In extreme cases, these farmers just throw away their harvest since they cannot afford to transport their products without the middlemen who are also in the pocket of the cartel. The same goes for the rice industry, where the market was manipulated for a different reason, which was to kill the rice tariffication law that kicked the National Food Authority out of the import business. Rice prices then surged to as high as P56 a kilo, which pushed President Ferdinand Marcos Jr. to impose price ceilings. The NFA used to have a monopoly on importation, but that resulted in acrimonious confrontations at the apex of government. The tariffication law, in turn, opened importation to all grain traders and relegated the NFA to buying rice from local farmers. Under the new anti-smuggling bill which has the endorsement of Mr. Marcos, an Anti-Agricultural Economic Sabotage Council headed by the President or his designated permanent representative will be formed. The proposed body will have the power to investigate and file charges, as well as freeze violators’ funds, properties, bank deposits, placements, trust accounts, assets and records. The creation of the body looks good on paper but in the real world, it might just add another layer of bureaucracy and source of corruption unless the cartel, which DA officials claim does not exist, is dismantled. Chief Presidential Legal Counsel Juan Ponce Enrile has a simple solution for breaking the cartel, which is for the government to confiscate all the rice overstock and let the owners of the warehouses prove that their huge inventory is legitimate. Such a move would prompt the traders to release more rice into the market to avoid confiscation. The imposition of the price cap on rice indicated that the prices are artificial since the markets are now selling at lower than the manipulated prices despite conditions being constant. An expected bumper harvest is also prompting the prices to go back to normal, after the attempt of the cartel to create a price shock to support their effort to return to the old ways. To know the real situation, President Marcos goes out of his way to see what is on the ground. His underlings, particularly at the Department of Agriculture, should do better. The post Fools in suits appeared first on Daily Tribune......»»
Lower power rates seen for Luzon,Visayas
The average electricity spot market price for Luzon and Visayas may continue its decline for the third consecutive month in August due to lower demand and higher supply......»»
Falling coal price takes earnings toll
Integrated energy firm Semirara Mining and Power Corp. or SMPC on Monday reported that its first-half earnings dropped to P19.2 billion — 26 percent lower than the previous year’s P25.8 billion. In a stock exchange report on Monday, the company said the downtrend was “mainly due to high base effect and normalizing coal indices.” During the second quarter alone, the company already booked a 5-percent downtick in its net income to P10.2 billion from a record high of P10.8 billion last year. However, every quarter, comparing the first quarter versus the second quarter figures, SMPC’s net income grew by 13 percent from P9 billion. Prices on downtrend From January to June, the average Newcastle price plunged by 54 percent from $320.3 to $148.9, while the average ICI4 price dropped by 17 percent from $85.7 to $71. “Even with lower coal prices, we delivered our second-best first half results because of China demand recovery and the improved performance of Sem-Calaca Power Corporation Unit 2,” SMPC president and COO Maria Cristina C. Gotianun said. Notably, from April to June, total shipments increased by 22 percent from 3.7 million metric tons or MMT to 4.5 MMT on higher deliveries to China and South Korea. Shipments to China increased by 75 percent from 0.8 MMT to 1.4 MMT, while shipments to South Korea rose by 21 percent from 0.8 MMT to 1.0 MMT. Gotianun, however, conveyed that the second half of the year will be challenging due to the rainy season and the planned shutdown of our three power plants. Yet, she noted that the “high starting inventory and strategic pivot to the spot market” of the company will help it navigate through the expected headwinds. The post Falling coal price takes earnings toll appeared first on Daily Tribune......»»
Games SMC plays
Manipulating the system, using its sheer dominance of the electricity industry with the huge generating capacity at its disposal, has long been suspected of business giant San Miguel Corp. Think tank Center for Energy, Ecology and Development or CEED found instances in 2021 of unplanned power outages during the peak summer demand periods where SMC appeared to have generated maximum markups. Monitoring by the group showed that between 31 May and 6 June 2021, the Ilijan plant owned by SMC unit South Premiere Power Corp. experienced a supply shortfall that was augmented through the Wholesale Electricity Spot Market by SMC units Ilijan, the SMC Limay coal-fired power plant, and the Masinloc coal-fired plant. Later, between 12 and 18 July, Luzon was hit by yellow and red alerts due to another Ilijan failure. To its rescue came the same three SMC subsidiaries. When SMC Limay had a derating, Meralco bought electricity from SMC Limay and Masinloc through the spot market. The price at WESM, during a red or yellow alert, spikes which mean bigger returns for the suppliers and higher monthly electricity bills. According to CEED, in early 2022, the first of several outages occurred as six coal-fired power plants and one hydropower plant underwent simultaneous forced outages. At the same time, three coal-fired power plants and one gas-fired power plant derated their capacities on 26 March 2022. The electricity network operator National Grid Corporation of the Philippines declared a yellow alert after 2,834 megawatts, or MW, were removed from the Luzon Grid. The most recent occurrence of outages was a red alert declared in Luzon by the NGCP last 8 May as two units of Masinloc Power Plant with a combined capacity of 659 MW went on a forced outage. The Masinloc coal plant, according to CEED, underwent unplanned outages seven times; the Limay coal power plant and cogeneration power plant twelve times; and the Sual coal plant counted 10 disruptions. Allegations of gaming thus arise, which the think tank said cannot be overlooked, “as major power players such as SMC continue to report soaring net incomes despite their power generation assets going on unplanned outages regularly.” A deep dive into the outages data showed that there were several power players whose power plants underwent outages or deratings, while their sister companies supplied electricity to the WESM during the same period. According to the CEED, the generation companies that contributed to the effective supply of WESM during the series of yellow and red alerts were sister companies of the power plants that had caused the alerts in the first place. The same gaming allegations were brought against SMC regarding the bidding for Meralco contracts. Two SMC units, SPPC, and San Miguel Energy Corp. offered very low bids for straight pricing contracts of Meralco which were designed to prevent sudden increases in electricity rates. Three years into the 10-year contract, SMC sought a revision of the terms with the Energy Regulatory Commission, or ERC, citing an increase in international coal prices and supply restrictions in the depleted Malampaya natural gas field. ERC turned down the SMC petitions and directed the company’s units to follow the terms of its contracts. SMC did not ask for reconsideration but instead went to the Court of Appeals where it promptly obtained a temporary restraining order which was progressively upgraded to a permanent injunction that stopped ERC from implementing its decision. In short, SMC got what it wanted through the Court injunction that threw away the regulator’s ruling and disregarded its quasi-judicial function. Using its vast influence, SMC was able to tear up contracts that it did not like without suffering any consequences. That’s what absolute big business power can do, to the extent of destroying government institutions. The post Games SMC plays appeared first on Daily Tribune......»»
Bills up amid P24-B recovery
Luzon customers may soon pay for additional charges in their monthly electricity bills as the Energy Regulatory Commission, or ERC, prepares to issue an order that will implement a high court-approved recovery of at least P24 billion in generation losses. In an interview with reporters last week, ERC chairperson lawyer Monalisa Dimalanta disclosed that the collection, which will likely be on a staggered basis within three years, takes effect next year. “We have calculated it, so the timing (of collection) is what we care about now. The cost is somehow hefty so we will spread the collection for three years,” Dimalanta said. ERC order According to her, the ERC will issue an order to allow the Independent Electricity Market Operator of the Philippines, or IEMOP, to start the Luzon-wide collection of generation charges. “It will be co-collected with the consumers, but not all generation companies have claims, there are others who will pay for it,” she noted. For Manila Electric Co., or Meralco alone, the development means that customers will collectively pay to recover as much as P22.64 billion in generation loss from way back in 2013. This is part of the Supreme Court, or SC, ruling released last year. SC voids ERC order It can be recalled that the SC — through a decision promulgated on 3 August 2021, a copy of which was only released online on 1 July 2022 — voided the ERC order that was supposed to regulate prices in the Wholesale Electricity Spot Market, or WESM for November to December 2013. The move, according to ERC, should have capped spot market prices for the period to cut rates and lessen the high prices impact on customers by more than a third, or to just P7 million from P24 billion. The SC pointed out that the ERC’s order cannot be implemented due to the possibility of market power abuse, which could affect electricity prices. Address abnormal spike However, in its order, the ERC argued that it only wanted to address the abnormal spike and unreasonable electricity costs imposed by generation companies, or gencos during the period. The regulatory body also investigated alleged collusion among gencos to manipulate prices of electricity in the spot market during the maintenance shutdown of the Malampaya gas facility for a similar period. Yet, the SC pointed out that the ERC failed to notify the affected parties about its probe, which violated the gencos’ right to due process. The post Bills up amid P24-B recovery appeared first on Daily Tribune......»»
Lethal injunction
It took the decision of the 13th Division justices of the Court of Appeals, chaired by Associate Justice Victoria Isabel Paredes and with Associate Justices Mary Charlene Hernandez-Azura and Florencio Mamauag Jr., as members, to erase a key reform in the energy sector and turn contracts into nothing but scraps of paper. Introduced during the term of former Energy Secretary Al Cusi and hailed as a pivotal policy to keep electricity prices low was the competitive selection process or CSP which was at the core of the legal skirmish between San Miguel Corp. and the Energy Regulatory Commission. Under the Electric Power Industry Reform Act, the ERC oversees the CSP and acts as the quasi-judicial body for the sector. The CA issued last week a permanent injunction on the ERC order for SMC generating companies, South Premiere Power Corp. and San Miguel Energy Corp., to honor their power supply agreements or PSAs with Meralco. The PSAs require a fixed price on electricity which means that the cost can’t be passed on to consumers. The contract only allows for a price escalation in parity with the inflation rate. The PSAs in effect were disregarded through the injunction order, placing the sanctity of Philippine contracts in question due to a court intervention. Had the contract been followed, getting out of the PSAs would have been costly for SMC, as contained in the provisions of the documents SMC obtained when it bid for the contract. In the “Termination upon Event of Default” provision of the PSA, a unilateral pullout makes SMC Global Power, the parent of SPPC and SMEC, liable for P255.5 billion which is required to be paid in full, within 15 days from the demand for payment. Based on the terms of the PSA, the agreed damages “upon the occurrence of a Power Supplier Event of Default” or when SMC Global Power fails to deliver on its committed supply, “Meralco shall be entitled to liquidated damages, in lieu of all other damages to which it may be entitled” in the amount of P100,000 per megawatt per day of the contract capacity for the remaining term of the agreement.” The penalty is computed at P100,000 a day for 1,000 megawatts multiplied by seven years which was the remaining duration of the PSA. In its petition to the ERC, SPPC and SMEC invoked a “change in circumstance” to rescind the PSAs since its definition in the deal did not provide for changes in fuel costs. SMC Global Power, during the deliberations on the petition for a temporary price adjustment, had warned ERC that if it failed to act on the plea, it would terminate the PSAs, which would mean higher electricity prices in Metro Manila and nearby provinces of as much as 30 percent. Like clockwork, the SMC threat happened courtesy of the injunction order. The court order effectively placed the burden of SMC walking out on its contracts on the electricity users who would have to pay for the higher cost of electricity as a result. Had the contract been followed, an industry source said Meralco would have likely applied the huge penalty as a rebate or to cushion the higher cost of electricity at the spot market. The situation was stacked in favor of SMC since its power plants, due to numbers, dominate the spot market and thus it gains when Meralco needs to augment supply. Consumer group Power for People said SMC should be barred from doing business in the energy sector “for being unreliable.” With the PSA terminated, it is estimated that the cost to consumers would be an additional P25.8 billion in added electricity charges for the remaining seven years of the SPPC and SMEC PSAs. One stakeholder said that with the injunction, SMC was given a free pass to abandon the PSAs. The latest ruling affected some 300 megawatts supplied by SMEC. Meralco will have to source electricity from the spot market until it bids out a new contract. SPPC and SMEC, combined, supplied a total of 1,000 MW of capacity under the PSAs. The CA decision becomes patently anti-consumer considering that setting a precedent with the SMC case will prod other power suppliers of Meralco with straight pricing PSAs to instead seek court relief instead of petitioning the ERC. The sector then becomes a convoluted mess with unreliable contracts which are instantly thrown away through court injunctions. The post Lethal injunction appeared first on Daily Tribune......»»
CA conundrum
What gives in the recent Court of Appeals decision that effectively emasculated the Energy Regulatory Commission? The ruling, in effect, said SMC was correct in its petition to the ERC asserting a “change in circumstance” to allow it to set aside the fixed-price provision in its contract with Meralco. Moreover, the ruling favored SMC’s claim that the adjustment would result in the least electricity cost, which was the conglomerate’s contention when it filed the petition with ERC. In its plea, SMC’s power units sought a 30 to 34 centavos per kilowatt hour increase in the rate it charged Meralco. Meralco as the electricity distributor then passes on the cost to consumers in their monthly bills. The court in its decision weighed the impact of the various options and favored the one that SMC proffered as having the most benefit to consumers. The ERC in its October decision dismissing the petitions of SMC arms, South Premiere Power Corp. and San Miguel Energy Corp., cited the straight pricing scheme in the power supply agreements of both firms with Meralco. SMC, instead of petitioning ERC for a review, went straight to the Court of Appeals to seek temporary restraining orders for both SPPC and SMEC. The CA through its 13th Division promptly issued a TRO on SPPC which in effect suspended its contract with Meralco, as SMC had warned if the ERC did not go along with its wish for a price adjustment. President Ferdinand “Bongbong” Marcos Jr. then urged the court to review the TRO, fearing that it would result in higher electricity bills. The CA’s 16th Division then rejected the TRO petition of SMEC but allowed the consolidation of the cases with the 13th Division, which issued a ruling later upgrading the SPPC TRO into a writ of preliminary injunction. The latest 13th Division ruling was the provision of permanent injunctions to both SMEC and SPPC. Going by the principle of honoring contracts, ERC, as the regulator, needed to enforce the fixed-price provision in the PSAs which covered about 1 gigawatt of electricity supply to Meralco. SMC in the deliberations with the ERC said that it had been hemorrhaging money — P15 billion since 2021 from operating the Sual coal and the Ilijan natural gas power facilities amid high global coal prices and unilateral natural gas supply restrictions from Malampaya. The CA’s ruling overturned the ERC and thus allowed SMC to recover its claimed losses by passing it on to consumers. SMC can also seek new adjustments retroactively from the time that it was considered to have been affected by the high global prices and natural gas supply restrictions, based on the rulig. The CA decision would have the immediate effect of a likely price increase since the PSA would be terminated, forcing Meralco to buy electricity from the spot market. The ultimate effect of the CA decision, however, would be to weaken the regulatory function of the ERC since it will set a precedent for parties in a contract to undermine the regulator’s decision by going directly to the CA. The ERC, thus, is fighting to uphold its function under the Electricity Power Industry Reform Act or Epira with its vow to appeal the CA decision in the Supreme Court. “The decision is not yet final and we will still file a motion for reconsideration. If granted, that's another discussion. If denied, we will go all the way to the Supreme Court,” said ERC chairperson Monalisa Dimalanta. It is indeed disconcerting that businesses that can pull all the strings overstep the rules, including the sanctity of contracts, aided by the court. Solicitor General Menardo Guevarra in defending the ERC said the CA’s 13th Division “violated the separation of powers and overstepped its boundaries when it directed the parties (SMC and Meralco) to enter into good faith negotiations” on the PSA of SPPC. He said that the 25 January resolution granting the writ of preliminary injunction and issuing the directive to renegotiate the terms of the contract “impinges on the executive jurisdiction of both the Department of Energy and respondent ERC.” Guevarra said that a renegotiation “was not even prayed for in the petition.” The $64,000 question is what prompted the CA to go out of its way to favor SMC despite the business behemoth effectively breaching its contracts with Meralco. The post CA conundrum appeared first on Daily Tribune......»»
Nuke an imperative
An economic breakout is possible for the Philippines amid the momentum that has been built up over the past two years post-pandemic. From a 5.6-percent growth in 2021, the economy surged to a 7.6 percent expansion last year, indicating that the economy may be catapulted to even higher growth by the end of the year. Strong growth is being achieved against the backdrop of a global economy being weighed down by high prices and the recurring threat of widespread recession. Asian economies are being relied on to provide the fuel that will jumpstart global commerce and the Philippines is expected to set the pace of development. While the prospects have never been better for the local economy, the consequence would be higher electricity demand that would be far more than what had been previously expected. The upsurge in electricity demand would require ramping up supply quickly and efficiently, which will be hobbled in turn by international commitments to cut down on carbon emissions precluding fossil fuel use. Multiple problems beset the move towards renewable energy, including cost, unpredictability, and lack of policy support. A limiting factor to growth is the lack of investments that unfortunately are being turned off by the cost of electricity in the Philippines, which is among the highest in the world. The shift to nuclear power becomes imperative as this technology’s development may address the country’s problems on price, adequacy of supply, and meeting environmental covenants. Resolving the power inefficiencies requires huge investments in infrastructure and alternative energy sources, experts said in a forum sponsored by the state think tank Philippine Institute for Development Studies. Even though a policy for a nuclear program was put in place during the term of former President Rodrigo Duterte under Executive Order 164, being awaited by investors is the updating of laws and the ratification of international legal instruments before they plunge into nuclear energy projects. The government may not be allowed to operate a nuclear facility nor revive the Bataan Nuclear Power Plant under the provisions of the Electric Power Industry Reform Act or EPIRA which limits the government to engaging in power generation only for missionary purposes. Thus, putting the government back in the power generation business needs amending the law. Experts at the forum said the country must address the energy problems squarely as a five-hour power outage inflicts about P556 million in economic losses. Successful economies like Singapore will find unacceptable the level of reliability of electricity in the country. The past few years saw the country logging power interruptions at an average of 10 days a year compared to Singapore’s one hour in 10 years. As a rule of thumb, the experts said that to reduce the level of brownouts to one day a year, the required capacity addition must be at least 1.164 gigawatts to serve 250 hours a year. Economic momentum depends on how quickly the problems are addressed, which makes nuclear technology imperative. A classic dilemma is how generating companies or gencos cannot recover the cost from the Wholesale Electricity Spot Market as a result of a secondary price cap at P6,245 per kilowatt-hour. Power producers are thus forced to agree to the market price even if they are operating at a loss, which will not be necessary for a nuclear facility that is not vulnerable to international price fluctuations. Giving nuclear power a shot at being a contributor to the energy mix, thus, will ease business apprehension on supply and pricing that should open up the investment tap for the country. The post Nuke an imperative appeared first on Daily Tribune......»»
Jekyll and Hyde
The government’s chief lawyer tried to bring to the attention of the Court of Appeals, or CA, the perplexing or even disturbing situation where two of its divisions issued conflicting resolutions on two identical cases. Brought before the CA were the opposition of two San Miguel Corp. arms for its South Premiere Power Corp. or SPPC and San Miguel Energy Corp. or SMEC to the Energy Regulatory Commission’s junking of petitions to suspend power supply agreements with Meralco. Both have straight-pricing PSAs that restrict pass-through of costs to monthly bills that SMC said tied up its generating companies to mounting losses from, in the case of SMEC, higher costs of coal and, in the case of SPPC, the supply restrictions due to the depleted Malampaya natural gas field. Solicitor General Menardo Guevarra, in his partial motion for reconsideration ad cautelam, cited that while the CA’s 16th Division has been circumspect, the CA’s Thirteenth Division has “exhibited apparent prejudgment.” To put things in context, the 16th Division denied SMEC’s petition for a temporary restraining order on ERC but the 13th Division issued both TRO and writ of preliminary injunction or WPI in favor of SPPC. Guevarra’s motion indicated that injunctive relief is issued to preserve the status quo and not to impose new conditions. He quoted the 16th Division that ruled “the status quo, in this case, is maintaining the Contract Price as stated in the Power Supply Agreement.” The court then discussed the rationale for denying SMEC’s prayer for the issuance of TRO and/or WPI. “To emphasize, the writ of injunction, if granted, will not serve its purpose, since it will have the effect, not of maintaining the contract price, but of setting aside the assailed order itself, thereby rendering the main case, the petition for certiorari, moot,” the 16h Division said. The WPI will also give the petitioner unrestricted power to terminate, at its own will, the Power Supply Agreement to the detriment of the public consumers, according to the ruling. Contrary to what SMC has been pointing out that it had no intention of canceling its contract with Meralco and that what it sought is a temporary relief, Guevarra said immediately after SPPC posted the bond required for the TRO that the 13th Division granted, it went on to “unilaterally, in clear violation of the exhaustion and prior recourse remedies in the PSA, cease the supply of electricity to private respondent Meralco. “No less than the parent firm, SMC, announced the immediate cessation of the PSA (between SPPC and MERALCO) on its website on 7 December 2022,” he added. The press statement titled “ERC rejection of ‘least cost’ option forces SMC to cease supplying power to Meralco under Ilijan PSA” sought to place the blame on the regulator for the turn of events. The sudden withdrawal of the Ilijan plant from the supply of electricity forced Meralco to seek alternative sources more expensive — the Wholesale Electricity Spot Market and emergency PSAs. Despite the conflicting decisions, the CA still granted SMC’s petition to consolidate both cases under the 13th Division which acted favorably to the company. The act of moving for consolidation of the two cases came “only after SPPC obtained a favorable ruling from the Honorable Court’s 13th Division is a mere afterthought and a circumvention of the proscription on forum shopping,” Guevarra stressed. He explained that “forum shopping is not only limited to instances where identical reliefs founded on the same facts and/or subject matter are sought from different fora and/or tribunal.” Cited as a precedent was a Supreme Court decision “that forum shopping exists when two purportedly different actions were filed with the Court of Appeals and assigned to two different divisions, thereof.” SMC came out as a clear winner in the CA’s moves despite the regulator’s ruling on the simple and basic premise that parties to a contract should honor its terms. The indefinite WPI implies that the court became vested with the omnipotence to break commitments under a contract that is sacred in the business world lest investor confidence is lost. The post Jekyll and Hyde appeared first on Daily Tribune......»»
ERC urged to ensure least cost following denial of Meralco, SMC petition
Infrastructure-oriented think tank Infrawatch PH is calling on the Energy Regulatory Commission to ensure that the rates for emergency and spot market procurement by Meralco will be comparable to the price proposal in the rejected joint petition of the power distributor and San Miguel Corp.’s power units......»»
New power spot market pricing methodology OKd
The Energy Regulatory Commission has finally approved the new price determination methodology for the Wholesale Electricity Spot Market, which will speed up electricity trading and pave the way for the full operations of the electricity bourse in Mindanao......»»
Meralco rate seen flat in August billing
The customers of Manila Electric Company (Meralco) can rest easy in this month’s billing cycle as the utility firm is anticipating that its all-inclusive pass-on rate will be flattish or there could even be a slight reduction depending on the final billing of its power suppliers. “The overall rate movement looks to be flattish due to improved power situation for the July supply month,” Meralco Spokesman Joe Zaldarriaga has noted. The other factors that could potentially pull down electricity tariffs this month would be the strengthening value of the Philippine peso versus the US dollar; as well as the quarterly repricing of Malampaya natural gas prices. Meralco procures significant portfolio of its supply from power plants fueled by gas from the Malampaya field – hence, the quarterly reckoning of the gas price could have a softening impact on its pass-on cost to the consumers. Zaldarriaga qualified “there is a possibility for a minimal decrease in overall power rates and generation charge because of these factors.” On the supply situation, the Meralco executive noted “there were no yellow alerts in July; and power supply was more stable compared to June – with lower demand in the grid as well.” He indicated that the steady state of power supply in Luzon last month “may contribute to lower WESM (Wholesale Electricity Spot Market) prices and a decrease in generation charge.” And if the impact of the quarterly repricing of the Malampaya gas will be factored in, plus the reinforced value of the local currency, such elements could contribute to the overall lowering of the generation charge for the August billing. The generation charge accounts for roughly 55 to 60-percent of the overall pass-on cost in the electric bills, hence, a downtrend in that cost component could be substantially felt by consumers. Meralco’s electricity rates had been on declining drift in the past months –and this was precipitated by lower generation charge due to slowdown in demand; in addition to the company’s efforts on invoking force majeure claims with its supplier-companies; that in turn had resulted in lower rates for its customers.This year’s plague of the coronavirus pandemic had shifted consumption upswing on to residential end-users; hence, the rate reductions in the past months had been a valuable help in managing power budgets......»»
Power spot market prices lower in 2023
The average cost of electricity traded at the spot market went down in 2023, snapping two straight years of increase, the Energy Regulatory Commission said......»»
Power spot market prices likely lower this month
Electricity prices in the spot market are expected to go down this month due to a reduction in electricity demand coupled with improvements in supply levels......»»
Power spot market prices likely lower this month
Electricity prices in the spot market are expected to go down this month due to a reduction in electricity demand coupled with improvements in supply levels......»»
House leaders check SRP compliance
Speaker Martin Romualdez appealed to market vendors yesterday to follow the suggested retail prices of essential goods, which usually spike during the holiday season. Romualdez made the call following a surprise inspection at Farmers Plaza in Cubao, Quezon City, with Deputy Majority Leader for Communications Erwin Tulfo. The leadership of the House of Representatives has vowed to monitor markets to ensure compliance with the SRP set by the government to stop the overpricing of basic commodities, especially food. “Rice and other noche buena items must be affordable. Vegetables such as onions, garlic, tomatoes, cabbage, and others must be within the means of our countrymen,” Romualdez said. Conducting surprise market inspections, according to the Speaker, could prevent price gouging by retailers during the Yuletide season. It is also part of the oversight function of the House to combat inflation, he added. “The Christmas season is meant to be a time of giving and compassion, and we want to make sure that prices of goods are affordable to the great majority of our people,” Romualdez said. He said the prices of vegetables and meat remained steady, except for the cost of rice, which he said has gone up. Last week, the Department of Agriculture said the cost of well-milled and regularly milled rice will be pegged at P48 and P41 to P43 per kilo, respectively, in December. On the other hand, prices of several noche buena items, such as ham, fruit cocktail, among others, had gone up based on the Department of Trade and Industry’s price guide released last week. “We will continue the all-out war against profiteers preying on hapless consumers,” Tulfo said. In August, Romualdez, Tulfo and officials of the Bureau of Customs carried out a surprise inspection of several warehouses in Bulacan in the wake of a spike in the price of rice due to hoarding......»»
EEI ‘hold’ tipped with robust infra
Listed infrastructure multinational EEI Corpo. posted a net loss of -P701.12 million in the second quarter, primarily due to losses from its equity in associates and joint ventures, primarily its unit Al Rushaid Construction Co. Ltd., or ARCC. Consolidated revenues rose by 25 percent from a year ago to P7.85 billion, but its gross profit shrank by 21 percent year-on-year to P515 million due to delays in materials, effects of bad weather, and license approvals. Brokerage house and research firm Regina Capital Development Corp., or RCDC, said the growth in EEI’s topline was mainly driven by improving construction contracts. “The company’s unworked portion of existing contracts is at P47.4 billion but expects a robust inflow of projects. The Build, Better, More Infrastructure Program is expected to boost construction services demand,” RCDC said. It added that the construction sector experienced growth in gross fixed capital formation in 2021 and 2022, an indication of potential recovery despite the economic challenges. However, the sector’s growth in the second quarter was below average, which RCDC said revealed economic risks. The price index, which has been on a downtrend since October 2022, could be a potential growth source. BBM’s main growth driver The BBM program, which will continue to stimulate domestic construction demand, will also benefit the sector. “Given the challenges posed by the slowed growth in gross capital formation for construction, as well as the impact of losses from equity in associates and joint ventures on EEI’s earnings, we are reducing our target to P5.30 per share, down from P7.50. This adjustment reflects the cautious outlook for the construction sector and the need for EEI to address its associated losses while also acknowledging potential future opportunities such as the government’s BBM infrastructure program. Hence, we are placing a “hold” recommendation on EEI. RCDC cited the updates on the company that merited its recommendation. EEI has continued with its reorganization. In a report to the stock market back in September 2023, its board approved the divestment of the company’s 60 percent interest in its subsidiary, BiotechJP Corp., a company engaged in the manufacture of food and therapeutic food products, as it focuses on its core business which is construction. Real estate brand Filigree tapped EEI Corp. for the general construction works of its newest project, Two Botanika, in Alabang, Muntinlupa. EEI’s unit, EEI Power Corp. is set to develop an electronic vehicle charging system through a new corporation after partnering with a cloud solution and service provider. EEI Power said it would have a 40 percent stake in the new corporation that it would establish together with SysNet Integrators Inc. The post EEI ‘hold’ tipped with robust infra appeared first on Daily Tribune......»»
LPG Expo to tackle industry trends
As industries and nations across the globe find ways to reduce greenhouse gas emissions, liquified petroleum gas is likely to gain attention as a cleaner alternative to fossil fuels. All data show LPG emits lower amounts of carbon dioxide than diesel and coal, making it a better option for transportation, cooking, and power generation. To explore the ever-evolving world of LPG, the Liquified Petroleum Gas Industry Association, the Liquified Petroleum Gas Marketers Association, the World LPG Association, and several regional associations will host the 4th Asia Pacific LPG Expo is set to make waves in the Liquefied Petroleum Gas from 10-11 October 2023 at the Marriott Hotel. With a diverse lineup of over 30 international and local companies exhibiting, the Asia Pacific LPG Expo continues to be the cornerstone for LPG professionals and industry enthusiasts, offering an invaluable platform to connect, learn, and explore the ever-evolving world of LPG. It is the gateway for esteemed international and local LPG companies to showcase their industry-leading practices and cutting-edge products and services. Beyond the expansive exhibition, the Expo hosts a dynamic conference featuring influential figures in the LPG industry and government representatives who will deliver insightful presentations on policy frameworks, safety standards, cutting-edge technologies, market trends, and investment prospects. These discussions will be led by renowned industry experts and innovators, providing attendees a competitive edge in navigating the dynamic LPG landscape. Local stakeholders and regulators such as former Congressman Arnel Ty from the LPGMA, Mercedita Pastrana from the LPGIA, director Rino E. Abad from the Department of Energy, and director Neil P.Catajay from the Department of Trade and Industry will be on site to share and discuss in details the on the latest regulations. Representatives from the various leading LPG Companies in the Philippines will also present to share more about the landscape of the local LPG industry. Be part of this momentous occasion at the esteemed Marriott Grand Ballroom Convention Center and attend with the participation of thousands of local and international delegates, along with government representatives and distinguished LPG professionals. Experience an event that will redefine the trajectory of the LPG industry in Asia Pacific. Secure your spot today and embark on a journey of limitless possibilities. The post LPG Expo to tackle industry trends appeared first on Daily Tribune......»»
Should BSP defend the peso?
Amid reports that the Philippine peso is now among the worst-performing currencies this quarter, the Bangko Sentral ng Pilipinas is said to be mulling over intervening to defend the currency at P57 to the US dollar in hopes of arresting its slide. However, it also said it won’t intervene much if the peso slides along with other currencies. In light of present-day realities, should the BSP proceed with an intervention? As we all know, the exchange rate policy is a critical aspect of a country’s economic strategy, influencing its trade balance, inflation rates, and overall economic stability. A fixed rate of P57 to the dollar implies stability and predictability for businesses engaged in international trade. A stable exchange rate can foster investor confidence, attract foreign direct investment, and stimulate economic growth. On the other hand, a flexible exchange rate allows for adjustments in response to changing economic conditions, potentially aiding in external competitiveness. One of the primary arguments in favor of defending the Philippine peso at P57 to the US dollar is stability. A fixed exchange rate provides businesses with a clear and unchanging benchmark for international transactions, reducing uncertainty and mitigating risks associated with currency fluctuations. This stability can attract foreign investors, offering a predictable business planning and investment decisions environment. Moreover, defending the peso at P57 may help control inflation. A stable exchange rate can contribute to price stability by preventing imported inflation. If the peso depreciates significantly, the cost of imported goods and services will rise, leading to higher inflation rates. By defending the peso at P57, the central bank can act as a bulwark against inflationary pressures, ensuring the currency’s purchasing power remains relatively constant. In terms of trade dynamics, a fixed exchange rate can be advantageous. A strong and stable peso makes imported goods more affordable for consumers, contributing to a higher standard of living. Additionally, it can encourage domestic industries by making exports more competitive in international markets. This could lead to increased export-led economic growth, job creation, and reduced trade deficits. While defending the Philippine peso at P57 to the US dollar offers certain advantages, there are also compelling arguments against such a fixed exchange rate. One major concern is the loss of monetary policy autonomy. In a fixed exchange rate regime, the central bank’s ability to independently conduct monetary policy is limited, as it must adjust interest rates to maintain the targeted exchange rate. This lack of flexibility can be a significant drawback, especially in the face of changing economic conditions. Furthermore, a fixed exchange rate may not reflect the true market equilibrium. If the peso is overvalued at P57 to the dollar, it could lead to a loss of competitiveness for Philippine exports. This might hinder economic growth in the long run as industries struggle to compete globally. Additionally, an overvalued currency could contribute to persistent trade deficits, as the cost of imports remains relatively low. Another consideration is the potential for speculative attacks. If market participants believe that the fixed exchange rate is unsustainable, they may engage in speculative activities to profit from an anticipated devaluation. This can lead to increased pressure on the central bank’s foreign exchange reserves, making it challenging to maintain the targeted exchange rate. In conclusion, whether the central bank should defend the Philippine peso at P57 to the US dollar is nuanced, requiring careful balancing of economic objectives. While a fixed exchange rate can offer stability, attract investment, and control inflation, it comes at the cost of reduced monetary policy autonomy and potential distortions in trade dynamics. Ultimately, the central bank must consider the broader economic context, international market forces, and the long-term sustainability of its exchange rate policy. Flexibility and adaptability may be vital in navigating the complexities of the global economic landscape while fostering a resilient and competitive domestic economy. The post Should BSP defend the peso? appeared first on Daily Tribune......»»
Marcos bets on early harvest
President Ferdinand “Bongbong” Marcos Jr. is betting on the harvest season to come earlier than projected to end the persisting price shock that required a government response of putting a cap on retail prices. The price ceiling was accompanied by an order increasing the farm gate prices to relieve farmers of the low offers from traders. Marcos expressed optimism that the early harvest of palay (unhusked rice) would help lower market grain prices. In a chance media interview Saturday, Marcos expressed hope that Filipinos will once again reap the effects of “more improved production” in the agriculture sector. He also reiterated his decision to order the temporary imposition of ceilings on rice was in response to the sudden spike in retail prices of the staple grain. “We’re already harvesting. When that comes in, I think we will see the prices go down. It would be determined by market forces,” Marcos said on the sidelines of rice distribution to about 2,000 qualified beneficiaries in Iriga City, Camarines Sur. In August, the Department of Agriculture, or DA, reported an estimated 900,000 metric tons of the palay output. Marcos said the palay harvest, which is expected to peak in late September to October, will contribute mainly to the country’s production from July to December. By this time, the DA estimated that the palay harvest would peak at 11.5 million metric tons. Data from the Philippine Statistics Authority showed that the national palay output from January to June 2023 rose to 9.02 million MT, 3.4 percent more than the 8.7 million MT production for the same period in 2022 and 2021. Marcos added that the government is currently dealing with hoarding of rice supply to manipulate the price of the staple grain. Supply’s not the problem As hoarders are suspected of delaying the release of rice, Marcos said, “There’s no need not worry about the supply.” He said the country has sufficient stock of the staple. “We are here to help those in need because we know that the price of rice has increased,” he added. Marcos said rice prices were so high, prompting the government to impose a price cap. Under Executive Order 39, which took effect on 5 September, Marcos ordered the implementation of a price ceiling of P41 per kilogram for regular milled rice and P45 per kg for well-milled rice. Marcos stressed that one of the government’s thrusts is to address the gaps and challenges in the agricultural sector, particularly “rice distribution that affects supply and prices.” “We have a lot of rice, but it is not being correctly distributed. That’s why we have no problem with the rice supply here in the Philippines,” he said. Marcos said DA is exhausting efforts to boost the supply and reduce the cost of rice. In the meantime, he said the government must implement measures such as imposing a price cap, providing cash aid to rice retailers, and setting new palay buying price range for the National Food Authority to help farmers and secure inventory. Farmers happy with hike The DA said farmers from different regions were happy with the increase in the buying price of the National Food Authority at the farmgate of P16 to P19 per kilogram for fresh palay and P19 to P23 for dry palay. The new buying prices of NFA were ordered by President Ferdinand Marcos, who is concurrent Agriculture Secretary, on Monday last week to ensure that farmers, who are currently harvesting their wet season crop, would not suffer from abruptly declining prices for their fresh harvest beginning this month. DA Undersecretary Leo Sebastian said the farmers told them that traders usually use the NFA as their benchmark in setting their buying prices from farmers for the fresh palay. With the mandated price hike for NFA, such drastic price declines would not materialize. Jing Villamente The post Marcos bets on early harvest appeared first on Daily Tribune......»»