The Philippine Electric Distribution...
Transcript of The Philippine Electric Distribution...
The Philippine Electric Distribution Sector
April 29, 2014
Wallace Business Forum Quarterly Roundtable
1
Outline of the discussion
• Overview of the Electric Distribution Subsector
• Power Prices
• Supporting Economic Development
2
SUPPLY CHAIN OF THE PHILIPPINE POWER SECTOR
National Power
Corporation (NPC),
Privatized Generation
Companies,&
Independent Power
Producer Administrators
(IPPAs), etc.
Wholesale
Electricity Spot
Market (WESM)
Independent
Power
Producers (IPPs)
National Grid
Corporation of
the Philippines
(NGCP)
Generation Transmission
Distribution &
Supply
Distribution Sector
The power industry’s frontliners
• Regulated common carrier business requiring a franchise
• Subject to regulation by ERC
• “Atomistic”: as of 2009, the distribution sector is composed by• 119 electric cooperatives
• 17 investor-owned utilities
• 8 government-owned
Source: NEA, 2009 Distribution Development Plan
• Widely varying in markets, size, technical/ financial capacity, & operating standards (e.g., distribution voltage levels, metering)
Background: Investor-owned distribution utilities
• Serves political & economic centers• Example: cities of
Dagupan, Angeles, Tarlac, Cebu, Iloilo, Davao, Cagayan de Oro
Angeles Electric
San Fernando Electric
Tarlac Electric
Dagupan Electric
Cabanatuan Electric
La Union Electric
Ibaan Electric
Subic Enerzone
Clark Electric
Meralco
Davao Light
Cagayan Electric
Iligan Light
Cotabato Light
Visayan Electric
Mactan Electric
Panay Electric
Bohol Light
Background: electric cooperatives (NEA general information & statistics, 2013)
1st Sem2013
National
No. of operational ECs 119
Consumers served 9,923,725
Gross Revenue (thousand pesos)
57,276,326
Sales (GWh) 6,887
Peak Load (MW) 3,057
Total Workforce 21,562
Total Circ. Kms of line 314,088
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2013 AveNational
Ave Revenue/EC/Month 84 M
Ave Connection/EC 84,393
Ave kms of line constructed/EC
2,617
Ave conns/circ km of line 32
Ave MWh sales/EC/mo 10,069
Ave monthly kWhconsumption/connection
116
Ave System Loss 12.15%
Ave No of Employees/EC 189
Electric cooperatives and their markets are generally small
Meralco serves a strategic market
• Powers more than five (5) million customers in 33 cities and 78 municipalities
• The country’s center of commerce & industry• About 50% of the
country’s GDP• An estimated 60% of
manufacturing output• More than 30
manufacturing economic zones
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
23,834 24,660 24,806 25,078
26,219 27,049 27,516
30,247 30,592
32,771
34,084 GWh
4.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
4.054.21
4.32 4.39 4.464.57
4.704.85
5.035.19 5.37 m 3.4%
ENERGY SALES
CUSTOMER COUNT
CONSOLIDATED
Ave. Growth: 2009-13: 3.7%
2003-13: 4.8%
Ave. Growth: 2009-13: 2.9%
2003-13: 3.3%
Market has been steadily growing
Large, diverse and sophisticated household customer base
The Residential market is becoming increasingly
sophisticated
About 45% of Residential Customers are Lifeline Customers
Distribution of Residential Customers
Meralco serves the country’s center of commerce & industry and its hub of government services & infrastructure
• Providers of outsourced business processes
• HQ of shared services of global companies
• Deustche Bank, Chevron, etc.
• Hotels & hospitals
• Telecoms & transportation
• Internet backbone, LRT & MRT, airport, etc.
• All major media companies
• Malacañang, Senate & House of Representatives, Supreme Court,
• Armed Forces, National Police & Office of Civil Defense
• PAG-ASA
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Our customers also compete in the world market
• More than 30 manufacturing economic zones are Meralco customers• Laguna Technopark, Gateway Business
Park, Calamba Premier Industrial Park, etc.
• These manufacturers compete in a global market• Exporters vs. manufacturers in other
countries • Electronics & semiconductor
companies
• Domestic manufacturers vs. imports • Steel & cement companies
They expect to receive at least the same kind
of service they did in their home countries.
Ave. Retail Rate, 2013Generation Charge, largest component in customer’s bill, 57.1%; Meralco 17.5%; NGCP 9.1%
PARENT
* Generation Retail Rate (applies to captive customers only)
** Other Charges are based on total captive and contestable customers in Meralco Franchise Area
Generation57.1%
NGCP9.1%
System Loss4.9%
MERALCO17.5%
Taxes/ UC/ Subsidies
11.4%
Share of All customers
BILL COMPONENT2013
Overall Ave,
P/kWh
Generation Charge* 5.39
Distribution Charge**
(MERALCO)1.66
Transmission Charge**
(NGCP)0.86
System Loss Charge** 0.46
Taxes, Univ Charge** 1.08
TOTAL 9.45
Regional Comparison of Electricity PricesFindings of the International Energy Consultants
• Philippine tariffs are “fully cost-reflective, which is sound economic policy”• Policy is similar to Singapore, Japan, and Australia
• Rates in Thailand, Malaysia, South Korea, Taiwan, & Indonesia are low due to “government subsidies”• “Tariffs remain well below the cost”
• “Poor economic policy … unsustainable”
John Christopher Morris, Ph.D.
Managing Director
Comparison of Average Retail Electricity Tariffs
0.00
15.00
30.00
USc
/kW
h
Bundled excl taxes
Unbundled Generation
Unbundled Transmission
Unbundled Distribution
Other Taxes & Charges
Notes:
1. Weighted average tariff (all customer categories), excluding VAT
2. Tariffs are for January 2012
Source: International Energy Consultants
“Cost-reflective” “Government subsidized”
Government subsidies in other Countries• Subsidy is up to 54% of the power cost
• Subsidies are through: subsidized fuel, cash grants, additional
debt, deferred expenditures
Source: International Energy Consultants
•VAT•Royalty/Tax on
indigenous fuels or Duty/Tax on imported fuels
•Real Property Tax•Other taxes & fees
•3% franchise tax, in lieu of all other taxes
Transmission
•VAT•Local Franchise Tax on pass
through gen/ trans/ system loss charges *
•Local Franchise Tax on distribution charges
•Real Property Tax•Energy Tax on residentials•Universal Charges incl FIT•Other taxes & fees
* not applicable to electric coops
Distribution
DELIVERYGENERATION
Phl Power Market is a fully-priced market. No Subsidies and heavily “taxed”
The power sector is heavily taxed
Strategic Imperatives
• Given the strategic nature of Meralco’s market, power security and competitiveness are very critical concerns
• Adequate, reliable and reasonably priced power supply
• Customer-centric processes and systems
• Highly robust and customer responsive network and service infrastructure
Investing to support development
CPIP 115 kV Line, Calamba Premiere
Industrial Park (CPIP), Calamba, Laguna
Laguna Bel-Air Substation, Sta. Rosa, Laguna
Carmelray 83-MVA Bank No. 2, Carmelray
Industrial Park, Calamba, Laguna
5,430 5,339
6,099
6,869
9,175 8,890 9,053
8,748
10,321 10,187
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
CAPITAL EXPENDITURES(in millions of Pesos)
Constant improvement of electric service performance to meet more stringent customer needs
21
3
3.5
4
4.5
5
5.5
6
6.5
7
7.5
2009 2010 2011 2012 2013
Tim
es
SAIDI, Forced and PAI
90
100
110
120
130
140
150
2009 2010 2011 2012 2013
Tim
es
CAIDI, Forced and PAI
60
70
80
90
100
110
120
130
140
150
2009 2010 2011 2012 2013
Min
ute
s
SAIDI, Pre-arranged
SAIDI: System Average
Interruption Duration Index
CAIDI: Customer Average
Interruption Duration Index
Consistent reduction of system loss
11.10
10.21 10.109.65
9.28
8.617.94
7.35 7.04 6.92
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
System Loss Cap8.5%
9.5%
1.5
8%
Record low system loss of 6.92% in 2013
Enabling emerging technologiesRenewable Energy Act of 2008
RE Act
Fiscal IncentivesNon-Fiscal Incentives
Renewable Portfolio
Standards (RPS)
Feed-in-Tariff Scheme (FIT)
Net Metering
Green Energy Option
• Promotes the development and commercialization of
renewable energy resources
• Provides incentives to investors in renewable energy
Customer Exports Energy to the Distribution Network• Daytime with Energy generated by the Solar PV
• Household uses up a portion of the Energy generated by Solar PV for basic load
• Energy generated in excess of the Household load is exported to the Distribution Network
Customer Imports Energy from the Distribution Network• E.g., Night time with no Energy generated by the Solar PV
• Household Energy demand is supplied by the Distribution Network
Energy
Imported
Energy
Exported
₱kWh Imported
₱kWh Exported
₱Net Billed Amount
l e s s
Import Meter
Export Meter
Import Meter
Export Meter
Net Metering: Customer as SupplierFirst program of the RE Act to be implemented