American firms' power deals in the Philippines

It is confirmed that Intel is indeed considering of leaving the Philippines due to various business and economic factors that are weighing heavily on its local operations, as reported in some nationwide broadsheets last week. Although, initial conjecture is pointing at the country's very high power cost as the main complaint of the giant chipmaker; however, it appears that there are other variables that come into play.

Nonetheless, there are talks roaming around the power sector disclosing that Intel's asking price for electricity is around Php3.19 per kilowatt-hour, and that rate is already inclusive of generation, transmission, distribution, metering, supply and other pertinent costs. Pretty low isn't it?

To give you a comparative reference, allow me to cite to you MERALCO's rate for March 2008 billing period. Based from the Philippines' largest power distributor's website at www.meralco.com.ph, its generation rate last month stood at Php4.3885 per kilowatt-hour, while its transmission rate stood at Php1.1566 per kilowatt-hour. The two variables alone already totalled Php5.5451 per kilowatt-hour, or about 74% higher that the all-in preferred price of Intel. Adding distribution, metering, supply and other pertinent charges in the equation could give an average customer of about Php8.00 to Php9.00 per kilowatt-hour cost of power.

So now you are convinced that Intel's asking price is way too low. And the way things are going, the US-based chipmaker could probably get the price. It's now the problem of the power distributor on how to get a cheaper source to arrive at that very low figures. [There are zero-priced energy during off-peak periods at the wholesale electricity spot market, anyway. - The Chronicler].

But you'll be more surprised if I disclose to you Texas Instruments' very low asking price. Well, the Baguio City-based technology plant, according to some industry leaks, has just gotten a power deal worth about Php2.15 per kilowatt-hour, all in! The deal is even more cheaper that China's average power rate offerings, which are currently pegged at around US$0.60 to US$0.70 per kilowatt-hour, or roughly Php2.40 to Php2.90 per kilowatt-hour.

That is why majority of commercial and residential consumer groups alike are pushing for the implementation of open access and retail competition at the earliest time possible so that they could have a chance too to negotiate their price and choose their service provider. Currently, only big foreign firms are being given preferential treatment in the country.