Tuesday, March 02, 2010

Government failure in energy

Recently, a number of power outages have re-occured in Metro Manila and the provinces. The usual explanation given by the government, the Department of Energy (DOE) in particular, is the "thin reserves" as there are not enough power supply while demand keeps rising every year. El Nino for instance, has been cited as a "cause" as many hydro-power plants could not function well due to low water level in many dams.

A friend in facebook posted this yesterday in his status:
"Secretary of Energy should resign. How is it possible that the Department of Energy did not forsee possibility of power shortage? Now he wants his principal to have emergency power without explaining how those powers will be used."

I actually thought that DOE Sec. Reyes has already resigned because he's running as a Congressman in the coming May 10 elections. Now we don't have enough electrical power, the DOE leadership and Malacanang want emergency political power?

An obviously staff of the Sec. reacted and argued that it's the lack of water for hydropower plants that is a big factor for the brown-outs. I find her explanation lousy. El Nino (and La Nina) occurs every 3-5 years, it's predictable. Population increases by 1.8M/yr, net of death, so demand for drinking, laundry, irrigation, other water uses keeps rising, it's predictable. Now they are implying that depleting water supply was unpredicted.

I agree that the DOE Sec. should resign. He made a lousy job of not predicting properly the power shortage. A better action on his part would have been to humbly accept his mistake, and step down if necessary. But he is asking the opposite. That he keep his job and that we the public give him and the President more political power to deal with power shortfall. Lousy. Get out, period.

This evening, I saw the Sec. on tv. He said, "if people should blame anyone, they should blame God", referring to the lack of water in hydropower plants. Us taxpayers are in deep s__t. We keep sustaining officials who are corrupt like the President, and arrogant like the DOE Sec.

Can't power suppliers or power aggregators just deal with power consumers directly, without going through government energy bureaucracies?

Another friend made a long comment. She said that it was the free market in general and the power deregulation (or EPIRA) law in particular, that contributed to the lack of power supply in the country.

Free market capitalism is rational, even radical and subversive. Why are there bar-bq or fishball or balut stalls on high density streets? Because there is profit and money to be made. Why are there no bar-bq or fishball stalls inside a cemetery? Because there are no buyers and no profit to be made.

Why are there not enough power plants or power aggregators or power transmission lines, etc. considering that power demand keeps rising, non-stop, every single year? Most likely there is not enough profit to be made. Before, energy bureaucrats decide how much profit rate power plants and petrol companies can make. With energy deregulation, energy bureaucrats decide how many signatures will be needed, how many weeks or months or years before those signatures will be affixed, how much taxes, fees, ECC permits, etc. will be paid, before a single power plant can be built. All of these require huge costs.

It is impossible not to make big money in power supply, transmission and distribution, considering the big power demand that becomes bigger every single year. But it is impossible to just build a power plant without passing through a maze of energy bureaucrats and politicians' interventions.

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