* This is my article in BusinessWorld last February 01, 2018.
Despite a significant increase in the Philippines’ power
generation capacity in recent years, the country’s installed capacity and
electricity production remains small compared to the ASEAN-6 and North East
Asian neighbors.
For instance, its installed capacity of 21.2 gigawatt
(GW) in 2016 was what Vietnam has about 10 years before. Vietnam now has twice
the Philippines’ installed capacity (see table).
A reliable and stable supply of energy results in
economic development.
More power plants mean more electricity generation; more
electricity generate will mean more competition for power supply and hence,
lower electricity prices for the consumers.
However, an unfortunate turn of events might prevent the
Philippines from realizing this both in the short- and medium-term. The
Ombudsman has issued a one-year suspension for four of five Commissioners of
the Energy Regulatory Commission (ERC) last Dec. 21, 2017.
The officials were charged with violation of Republic Act
No. 3019 (Anti-Graft and Corrupt Practices Act) in connection with the revised
implementation date of the competitive selection process (CSP). The Ombudsman
also said the suspended officials favored a few power supply contracts.
With only one Commissioner — Chair Devanadera — allowed
to work, here are some of the serious implications and problems.
1. No deliberations and resolutions on applications for
approval of power supply agreements (PSAs) and projects for transmission and
distribution by the National Grid Corporation of the Philippines (NGCP),
distribution utilities, and electric cooperatives. An estimated P1.588 trillion
worth of energy-related projects and capital outlays would be affected.
2. The inability to act on petitions for rate adjustments
and pass-on charges; consumer complaints, violations of industry players of
existing laws and regulations.
3. Non-issuance or renewal of certificates of compliance
(CoC) or provisional authorities to operate power plants.
4. The inability to award procurement contracts, like the
ERC meter seals and stickers being placed on electric meters of the
distribution utilities, among others.
With these problems, among the solutions would be the
following:
1. The President should appoint OIC Commissioners to temporarily
act on behalf of the four suspended officials until the suspension order has
lapsed in late December this year and the suspended officials will be back in
office.
2. Despite ERC paralysis, DoE will allow or accredit
players with expiring or pending CoCs to operate and trade at the Wholesale
Electricity Spot Market (WESM). The required ERC approval of CoCs will resume
only when there is quorum already at the Commission. DoE Secretary Cusi said
that “about 26 generation companies with a total of 3,314.60 MW generating
capacities have expired or have expiring CoCs in 2018… Additional new
capacities of at least 720 MWs are also expected to go into commercial
operation within the next few months. If not allowed to participate in the
WESM, the available electricity supply in the market will be curtailed, which
can result in higher market clearing prices.”
4. DoE should also be able to accredit or renew Retail
Electricity Suppliers (RES) with pending or expiring licenses, until the ERC
paralysis is resolved.
Several government branches and constitutional bodies
must always put in mind the welfare of the consumers. The inflationary pressure
of TRAIN law (higher oil prices, higher coal generation prices, among others)
is already mounting.
The “vested interest” of consumers — cheaper,
competitively-priced, and stable energy supplies — should prevail over vested
interests of politicians and regulators. There should be more power generation
companies and power plants, more electricity distributors and retailers — all
competing with each other to meet the consumers’ “vested interest.”
-------------
BWorld 181, Effects of Supreme Court TRO on RCOA, January 22, 2018
BWorld 182, Asia Liberty Forum 2018 in Jakarta, January 31, 2018
BWorld 183, Why low or zero income tax can mean more development, February 09, 2018
No comments:
Post a Comment