* This is my article in BusinessWorld last March 08, 2017.
The Philippines experienced a seemingly energy revival in
2016 and 2017 with plenty of new power plants commissioned and running.
Mindanao experienced an energy surplus after many years of frequent involuntary
“Earth hours” or almost daily blackouts lasting for many hours.
So it is ironic that while new power capacity were added
into the grid, Luzon including Metro Manila, still incurred occasional “yellow
alerts” in power supply. This indicated near-brownout situations that took
place a few weeks ago since several power plants went offline all of a sudden,
coinciding with maintenance and repair shutdowns that were scheduled ahead of
time.
Some groups blame “collusion” of some generating
companies (Gencos) to stage an artificial power deficiency and thus, command
higher prices for several hours on those “yellow alert” situations. However,
they offer little proof and numbers to back up this claim.
For me, the more plausible and visible cause is the
undeclared “collusion” of various groups including many government agencies and
environmentalist groups to delay if not stop the installation of more power
capacities to have huge reserves that can (a) cover even huge unscheduled power
shutdowns and (b) bring down electricity prices further as a result of intense
competition. See table below as proof.
With only 700+ kWh/person/year in 2014, that puts the
Philippines slightly higher than the electricity use of poor neighbors Cambodia
and Myanmar, and only half the electricity consumption of Vietnam, 1/4 that of
Thailand, 1/7 that of Malaysia and 1/13 that of Singapore.
Last Friday, March 3, I attended the forum on
“Institutionalizing Energy Projects as Projects of National Significance” by
Sen. Sherwin Gatchalian, Chairman of the Senate Committees on Energy and
Economic Affairs, sponsored by the Energy Policy Development Program (EPDP)
held at the UP School of Economics (UPSE) Auditorium.
The three reactors were Dr. Ronald Mendoza, Dean of the
Ateneo School of Government, Dr. Alan Ortiz, President and COO of SMC Global
Power Holdings Corp., and DoE (Department of Energy) Undersecretary Jesus
Posadas.
The senator recognized the problem of low power capacity of
the Philippines in general, and some big islands in particular. There are many
big committed and indicative power plants lining up but they often encounter
bureaucratic delays.
A paper, “An analysis of time to regulatory permit
approval in Philippine electricity generation” (2016) by Laarni Escresa of EPDP
showed that on the average, power plant operators need to secure 162 clearances
(MBC, 2014) and 102 permits.
So the Senator’s bill will prioritize these big power
plants (P3.5B or higher in capitalization) for faster approval process. For
instance, agencies are given 30 days to check the documents submitted; if they
fail to act on time, it is deemed that the papers are approved and permits be
automatically granted.
Alan Ortiz mentioned something that’s somehow a shocking
figure: Boracay’s electricity needs rose from 8 MW just 10 years ago to 100 MW
today. From 8 to 100 MW in just 10 years -- that’s a lot.
Undersecretary Posadas gave a good assurance that the DoE
is “agnostic” on the source of energy (renewable or not) and want to see more
power plants coming in. He also said that the DoE will no longer issue a 3rd
round of feed-in-tariff (FiT) for wind-solar. Good announcement.
Another factor that contributes to uncertainties in power
generation are those inefficient and losing electric cooperatives (ECs). They
just get power from the Wholesale Electricity Spot Market (WESM) and distribute
to their customers and do not pay the many Gencos that happened to supply their
electricity needs.
From the Philippine Electricity Market Corp. (PEMC), here
are the top three market participants or players which have unpaid energy
settlement Amounts at WESM as of Feb. 27, 2017:
(1) Albay Electric Cooperative, Inc. (ALECO) P98.59M, (2)
Abra Electric Cooperative (ABRECO) P63.97M, and (3) AP Renewables, Inc. P14.38M
(source: http://bit.ly/unpaidwesm).
The numbers above exclude the unpaid amount of ALECO in
their Special Payment Agreement with PEMC amounting to nearly P1B.
The National Electrification Administration (NEA) does
not seem to properly discipline certain ECs under its belt. To have an old debt
of nearly P1B and new debt of nearly P100M from one EC alone (Aleco) should be
a red flag indicator that this type of prolonged and sustained inefficiency and
losses have been tolerated.
The NEA should step back from this and other problematic
ECs and force them to corporatize and be subjected to bankruptcy laws under the
Securities and Exchange Commission (SEC).
The Philippines and its electricity consumers need stable
and cheap electricity. They do not need the burden of being dependent on ECs
that lose money and are unable to pay generation companies that further add uncertainties
to bureaucratic delays.
Bienvenido Oplas, Jr. is the president of Minimal
Government Thinkers and a Fellow of SEANET and Stratbase-ADRi.
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See also:
BWorld 111, Electric cooperatives and unstable power supply, March 01, 2017
BWorld 115, Centralization and federalism, March 23, 2017
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