* This is my article in BusinessWorld last February 23, 2017.
BWorld 113, Peace talks with CPP-NDF for another 30 years? March 04, 2017
Rotational and scheduled brownouts for several hours
about once a month, then unscheduled short brownouts from time to time, have
become a regular experience in the two provinces of Negros island. Despite the
installation of many huge solar plants in recent years.
I am currently in Sagay hospital in Negros Occidental to
visit my seriously sick father. Last night, there was brownout for about 10
minutes, the hospital’s generator set immediately takes over to supply
electricity to their patients and staff.
The Facebook page of the Central Negros Electric
Cooperative (CENECO) gives frequent advisory of power interruption that lasts
for nine hours (8 a.m. to 5 p.m.) until this month.
Stories and testimonies of frequent brownouts in many
cities and municipalities of Negros Oriental in 2016 are also reported in
dumagueteinfo.com.
In June 2016, the Department of Energy (DoE) said that
line congestion is building up in Negros Occidental due to many solar power
plants operating in the province. The abrupt influx of solar power plants is
causing the main line, transmission and interconnection lines to congest (Sun
Star Bacolod, June 10, 2016).
This month, Negros Occidental Electric Cooperative
(NOCECO) explained that one of the main reasons of higher electricity is the
increase in the transmission charge from P1.0538/kWh in January 2017 to
P1.1777/kWh in February 2017 or an increase of 0.1239/kWh. The transmission
rate hike is due to the increase in the ancillary service charges of the
National Grid Corporation of the Philippines (NGCP).
There are at least two issues here. First is the presence
of more brownouts in Negros island despite its having the most number of
installed solar power plants per sq. km. of land in the whole country, more
than 300 MW.
Solar power is very unstable and intermittent, zero
output at night and very low output when it is cloudy, or power fluctuates
wildly if clouds come and go in minutes. So there should be more ancillary
services or standby power plants, usually natural gas or diesel plants, that
should quickly provide power when thick clouds come and when evening comes.
Still, this causes power fluctuations that damage machines, engines and
appliances running on electricity and the leadership of Negros chamber of
commerce and industry have pointed this out to the DoE and NGCP last year.
Second, how is the NGCP regulated and accounted in its
transmission charge pricing and assets management?
Power generation is deregulated and hence, the extent of
competition among many players is the main regulator of the generation charge.
Distribution charge is regulated by the Energy Regulatory Commission (ERC)
because distribution utilities (DUs) like Meralco and the roughly 119 electric
cooperatives (ECs) nationwide are all monopolies in their respective franchise
areas.
So while there are 120+ distribution monopolies composed
of private DUs and ECs, the NGCP is a single, national monopoly in power
transmission.
There are 12 different charges in our monthly electricity
bill. The top six in the table below, and these five charges with lesser rates:
(7) universal charge, (8) cross subsidy charge, (9) lifeline rate subsidy, (10)
senior citizen subsidy, and (11) feed in tariff allowance (FiT-All). No. (12)
are value-added tax (VAT) and other government taxes, these are huge too but
not included in the table because they are unrelated to the electricity system.
Of these 12 different charges, subsidies and taxes, the
smallest is #10 while the fastest growing is #11, FiT-All: P0.04/kWh in 2015,
0.124/kWh in 2016, and set to rise to P0.23-P0.25/kWh this 2017, the ERC still
has to decide on the Transco petition for FiT-All hike (see table).
Notice in the table above the following: (1) In 2013 vs.
2017, all five charges have declined in rates in 2017 except transmission
charge which has remained practically the same at P0.91/kWh. And (2) In 2014
vs. 2015, a similar pattern where all five charges have declined in rates in
2015 except transmission charge which has even increased to nearly P1/kWh.
The possible explanations why the transmission charge by
NGCP seems to be the odd man out among the top six charges are (1) rising cost
of more ancillary services as more intermittent solar-wind power are added into
the grid, (2) it passes its own system loss to the transmission charge, (3) it
simply behaves like a typical monopoly, revenue-maximizing as consumers and
other players have zero option of other service supplier/s.
Brownouts and expensive electricity, these are ironic
events in our modern world. We should have stable and cheap electricity, no
brownouts even for one minute except after heavy storms and typhoons that knock
down electrical posts and power lines.
Government should step back in some heavy regulations
like forcing intermittent solar-wind into the grid which can discourage some
developers who can build stable and cheaper power like coal and natgas plants.
And giving high price guaranty for 20 years to renewables like wind-solar is
wrong and punishing the consumers. Technology changes very fast, the costs of
solar and wind equipment are falling fast, so why lock the high price for 20
years? This is wrong.
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See also:
BWorld 111, Electric cooperatives and unstable power supply, March 01, 2017
BWorld 112, Asia Liberty Forum 2017 in Mumbai, March 01, 2017 BWorld 113, Peace talks with CPP-NDF for another 30 years? March 04, 2017
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