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Strategies Impacting Electricity Market - A Comprehensive Analysis

This study delves into the intricate web of energy market strategies, subsidies, and privatization impact, uncovering high Return on Rate Base (RORB) approvals, market abuse cases, and the complexity of subsidies. The research highlights the effects of privatization on electricity rates and analyzes the controversial practices surrounding cross-subsidies and market concentration. Additionally, it explores the role of regulations and ineffective mechanisms in curbing market abuses and ensuring fair consumer pricing.

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Strategies Impacting Electricity Market - A Comprehensive Analysis

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  1. No more subsidies • Cross subsidies removed • We subsidize lifeline

  2. IPP contracts • Still being paid • No renegotiation

  3. Indexation • Geothermal • Natural gas

  4. Market Abuse • Exercise of market power • Business strategy of Aboitiz et al

  5. Increasing Concentration • Voltage 5 • Rural electric cooperatives next target

  6. DUs (Meralco) favor sister gencos • EPIRA allows DU to buy up to 50% of electricity supply from related company • UP College of Engineering studied Meralco’s buying pattern, showed that rates could fall by PhP2 / kWh if Meralco didn’t favor its sister gencos

  7. Higher Return OK’d by ERC • RORB used to be 8-12% • Raised • Now PBR

  8. ERC decisions • Dismissed WESM market abuse case • Ineffective to stop over-recoveries • Ineffective to stop market abuse • Ineffective to stop violation of Meralco’s contractual obligations

  9. Privatization • NPC assets sold way above fair market value • New owners thus have to charge more for electricity to recover cost • Kahithindi pa sila fully paid • Simple change in ownership will already necessitate higher electricity rate • Case of AgusPulangui

  10. VAT etc • VAT even on systems loss • Corruption and mismanagement also makes kuryente expensive • Government Attitude towards Consumers: Pnoy told Mindanawans: If you don’t want brownout, pay more.

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