Will ‘open access’ make energy in Davao cleaner and cheaper?

Open access” sounds like open source system, a term associated with software use. However, these two words could mean the world for power users in Mindanao, particularly in Davao which is among the main franchise areas of Aboitiz Power, formerly known as the Davao Light & Power Company.
These two words simply mean competition in the power retail sector. When it becomes a reality, it will revolutionize the sector and will introduce a lot of changes in the power industry.
“Open access will allow us to service customers outside our franchise area; however it will also be disadvantageous for us because other power companies will also be allowed to service those in our franchise area,” Aboitiz Power president and CEO Erramon Aboitiz said.
The approval of the open access policy, he said, will force Aboitiz Power to be more competitive and to look for more ways to serve its consumers so they remain loyal to the company.
What is open access?
Independent Power Producers (IPPs) and distributors like the Aboitiz Power have petitioned the Energy Regulatory Commission to allow interim open access in Luzon and the Visayas, in view of the slow progress in the government’s privatization of its power plants under the EPIRA or the Electric Power Industry Reform Act or RA 9136 which was approved in 2001.
Aboitiz said open access will soon be a reality in Luzon since the privatization of nearly 70% of the assets of the National Power Corporation is now in progress as provided for by the law.
“Open access in Davao City and in Mindanao may take longer, but it is a reality and a challenge we are preparing for,” he said. At present, he added, Agus and Pulangi are exempt from privatization until 2012.
The willingness of some players in the power industry to implement open access without the preconditions set in the EPIRA is shown by the petition submitted by these players to the ERC, requesting for interim open access.
Even President Gloria Macapagal Arroyo is pushing for the approval of interim open access in exchange of congressional amendment to the EPIRA law. It is believed that the amendment of the EPIRA law would lower power rates. The compromise was for the government to prioritize the renewable energy bill if the industry is able to come up with open access. RA 9513 otherwise known as the Renewable Energy Act of 2008 was thus signed into law by the President last year.
With open access in place, large electric users or those with a minimum consumption of 750 kilowatt hours or more can already buy their electricity directly from the power generators. These consumers will just have to pay the concerned distribution and transmission companies for using their wires in the process of delivering power.
EPIRA Law
The EPIRA aims to push for the restructuring of the power sector and the privatizations of the National Power Corporation’s assets. Under the law, the transmission power of the NPC has been transferred from the NPC to the National Transmission Corporation or Transco. The same law aims for Transco’s privatization.
Under the EPIRA, a total of 49 generation facilities, as well 26 IPP contracts producing more than 11,800 megawatts are supposed to be sold. Aboitiz said the “sale of at least 70% of these assets is the condition required before open access can be implemented.”
Will open access lower power costs?
Aboitiz said open access will result to more competitive power price and transparent pricing once it is implemented in Davao City.
Critics however claim that the power industry monopolies will still exist and power rates will still be high. In contrast to this, the EPIRA was supposed to dismantle monopolies to encourage competition and pave the way for lower power costs.
At least two thirds of power users are residential and other users, and there is a question as to how they can benefit from open access. For one, only 25% of power consumers, consisting of large electricity users, will benefit from open access.
It is claimed that true competition will not be realized by selling 70% of Napocor’s assets because it can also land in the hands of companies that also distribute power.
Open access and cleanergy Cleanergy is the latest buzz word from Aboitiz Power, as “it is AP’s brand of clean and renewable power.” Aboitiz said “it is an energy solution that will give power consumers an option to reduce their carbon footprint and attain a more sustainable lifestyle.”
Aboitiz said that when open access is established, Aboitiz Power will make Cleanergy an option for consumers who want to be environmental protectors while consuming sustainable energy.
Open access is still a new concept for most power consumers but it is an idea already looming in the horizon of Davao power consumers. It will soon be implemented in Luzon and in Aboitiz’ words, with most of NPC’s assets already being sold, open access is “irreversible.”