By MYRNA M. VELASCO
With the Power Sector Assets and Liabilities Management Corporation (PSALM) failing in its mandate to accomplish at least 70-percent privatization of the generation assets of National Power Corporation, a tripartite power supply arrangement is now being offered as an option for the large customers such as industries and commercial establishments.
The concept of a tripartite agreement was presented to the business community by Dr. Fernando Y. Roxas, professor of the Asian Institute of Management, during consultative assembly for stakeholders in the power sector.
He noted that such arrangement will involve the end-user, power generator and the distribution utility; all coming into an agreement to service the electricity requirements of a certain customer.
Roxas said this supply agreement would be aptly called as "contractual open access"; and he sees it as a better option, even for the distribution utilities, as compared to direct connections which completely bypass them in the chain of delivering service.
"Many DUs should welcome contractual open access because it is a better alternative for them rather than direct connections or self-generation, both of which bypass the DU," he added.
He has further stressed that the law does not prohibit such tripartite agreement; and this has already been resorted to as an option in the past; primarily within the franchise area of the Davao Light and Power Company (DLPC) in the late 90s.
Meanwhile, self-generation as another preference for industrial and largescale commercial customers could also be an appealing one, especially if a particular customer hankers for a quality of service beyond what is provided for under the Grid Code; primarily for industries located in Visayas and Mindanao.
However, he cautioned that in order for this option to become viable, "such customers should be able to recover the incremental cost of dedicated generation from the market price of the product he is manufacturing or selling."
The main attractiveness for self-generation facilities, Roxas noted, "rests with the ability to bypass transmission wheeling charges"; which is currently pegged at about
P1.00 per kilowatt hour.
However, given prevailing scenarios in fuel costs which are at most times on the uptrend; self-generation is seen to continue to become restricted in the sense that most of the available generation technology are either diesel or heavy fuel-based.
"Global benchmark prices for crude are not currently very encouraging," he stressed, noting however that "custom-designed co- or even tri-generation applications have produced many success stories", thus, he encouraged the business sector to explore further on these wider applications.
As opined by many in the industry, Roxas shared the view that policy reforms for the power sector should not just be let stuck somewhere, especially if PSALM continually fall short in divesting the NPC assets.
Through some interim mechanisms being proposed for the industry, he pointed out that assistance from the end-users could also be provided in helping to install "the requisite market discipline to weed out under-performing DUs and reward those providing excellent service."
