We're Number 1!... for most expensive electricity

The Philippines now has the most expensive electricity in Asia. As reported in the local papers, independent think tank International Energy Consultants said energy in the country cost an average of 18.1 US cents. By comparison Japan's electricity costs 17.9 cents. Further, household consumers pay the most, averaging 10 pesos per kWh or about 25 US cents. They offer a multitude of explanations for this - paying too much for Malampaya gas, lack of government subsidies, privatization.


Whatever the reasons, obviously the situation is detrimental to the country. There are a lot of solutions we can pursue. The obvious ones - renegotiating Malampaya prices, government subsidies, reverse privatization - may cause even more problems. Once again it will demonstrate that the government does not think straight and will reverse its decisions whenever politically convenient. That fosters an environment of uncertainty. Uncertainty discourages long term investment whether the investment is international or local in origin.


Perhaps a better solution would be to encourage energy conservation and small scale production. That's in line with the thrust towards privatization and the encouragement of small scale industries. Remember, privatization was undertaken to avoid the inefficiencies of public governance, potential for graft and the growing debt burden. The idea of encouraging small scale enterprises was to provide jobs and harness the potential of small scale entrepreneurship.
If we marry the two and pass laws encouraging small scale energy production we'd be hitting more than two birds. Suppose we implemented net metering. People with solar panels can sell back their excess usage to the energy company. More residents will be encouraged to install panels not just to save money but to produce income by generating more energy. More energy, higher incomes, lower prices, cleaner power.

Suppose we give tax breaks to small scale renewable energy investments. Farmers will have an additional source of income. What if we gave subsidies to small scale power generation? Maybe people will develop areas with less fertile soil if it can be used for energy production. Perhaps more readily available energy will make marginal farms more profitable as well. Solar, for example, could be used to power irrigation pumps or small desalination plants. If anything, we should be spending more effort into this instead of just focusing on oil efficiency.
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