June 12, 2002
In the Philippines, demonstrators have been out on the streets of Manila to protest against the high price of electricity. What particularly upsets the protesters is the fact that they must pay for their electricity whether they use it or not.This stems from deals reached last decade to fill a shortfall in generating capacity. And, despite the high prices, electricity supply is still erratic.
Jellyfish factor
Filipinos are used to occasional power cuts of the kind that blacked out half the country last month. This time, it was blamed on a glitch in computer software that was intended to prevent blackouts in the first place. On a previous occasion, the electricity industry put the blame on tons of jellyfish being sucked into the seawater cooling system of a major power station.
Floating generators
In the early 1990s, things were much worse. Then, a severe lack of generating capacity meant there were power cuts of 10 hours every day. The government ended the crisis by making the decrepit state-run National Power Corporation (Napocor) enter into supply contracts with private generating companies. These companies responded with astonishing speed, in some cases by sailing in floating power stations from abroad. In the end, the result was an excess of capacity.
Crisis
At the time this was not considered a problem because healthy economic growth was expected to increase demand. But five years ago the Asian financial crisis put the brakes on growth. Napocor has been left with contracts with the private generating companies that mean it has to buy the power they supply, even if there is no demand for it. Now, who pays for this excess power? Consumers do. (Or, to be more precise, the non-consumers).
Extra charges Every month, with rising indignation, hundreds of thousands of businessmen and householders inspect their latest electricity bills looking for the dreaded letters: PPA. The letters stand for Purchased Power Adjustment. It is an extra charge that appears at the bottom of the bill. On my own bill, it makes up a third of the total. The PPA represents the cost to the consumer of the power Napocor is contracted to buy, but which it cannot sell and it means that electricity prices in the Philippines are among the highest in the world.
Who pays?
Naturally enough ordinary Filipinos consider this scandalous. President Gloria Arroyo has been courting popularity by asking Congress to find ways to reduce or even eradicate the PPA. But Congress does not appear to have an answer to one crucial question: If the consumers do not pay for the excess electricity, who will? Putting the burden on taxpayers seems unlikely when the government is struggling to bring a budget deficit under control. And Napocor itself is already in poor financial shape. Furthermore, the government is mandated by law to privatise the firm - if it can ever find a buyer.
Suspicions
Such is the cynicism of Filipinos that many thought the most recent blackout was nothing to do with computer software at all. The theory was that it was a deliberate attempt to intimidate consumers, the supposedly implied threat being "either you stop complaining about the PPA, or you won't get any electricity at all". The power industry, of course, denied this suggestion.
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