Philippines President Gloria Macapagal-Arroyo has vowed to further reduce the cost of electricity as she stressed that cheaper power would result in a more competitive economy and thus attract both local and foreign investments.

In her recent second State of the Nation Address before a joint session of Congress, the President said she was elated to learn that electricity bills of consumers for the month of July have gone down because of the reduced purchased power adjustment (PPA) that she had ordered the National Power Corporation (Napocor) to implement.

She said that when she first became president, the Philippines had the second most expensive power rate in Asia. It is now the sixth most expensive.

According to the President, this was the result of the comprehensive 10-point programme that her administration has put in place to reduce power costs.

She said that rates are likely to fall further after the contracts of independent power producers (IPP) are reviewed.

Philippines is targeting to launch the first wholesale electricity spot market in Asia but without the pitfalls of the experience in California. Large consumers will be able to choose their electricity suppliers.

Meanwhile, the National Power Corp and the Manila Electric Co have agreed to offer pricing incentives to their customers in line with the government’s drive to bring down power costs, Energy Secretary Vicente Perez said.

According to AFX Asia, under the proposed incentives, Meralco and Napocor will adopt a declining block rate structure. Mr Perez said the two companies had offered to discount the rates for consumers with at least one megawatt consumption monthly, but the government has asked them to reduce the threshold to 500 kilowatts.

The incentives programme will be finalised within the week, but will need approval from the Energy Regulatory Commission, he said.