The Frequently Asked Question about the Electricity Market
Last week, we had a conversation with the building architect and building administrator of one of the towering buildings in Makati City. The main topic of the conversation was the current technologies in the solar energy conversion to electricity but the course of the discussion shifted on the power industry and the effect of the establishment of electricity market to them, bulk consumers.
He has one big question about the industry, which is also the common question of the Filipino people. Would the deregulation of the power industry and establishment and commercial operation or Spot Electricity Market lower the cost of electricity? The cost of electricity is a big concern for them because, according to them, more than 50% of their expenses go to electric bill payment.
My answer to that question was a deep silence because I didn’t knew what to answer. I cannot simply say “yes” or simply say “no” because the cost of electricity in a electricity market is actually driven by competition. It could be higher than our current price of electricity or lower. Ideally, if the generator will offer its electricity at their true cost and the competition is really perfect with no abuse of market power of some participants, the market should lower the cost of energy. But no one lives in an ideal world. The complexity of the electric power industry and the system, as well, also adds to the problem of attaining a healthy electricity market. I don’t think that the Architect was inclined enough to comprehend all of these.
Let us just hope for the best but prepare for the worst.
Filed in: Electricity Market
Local date: February, 2012
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