* BusinessWorld April 17, 2023.
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Mr. Non insisted on over-billing by Meralco from 2012 to present of around P100+ billion, of which P48 billion has been refunded to customers over the last two years. The refund is good but I am not sure if Mr. Non should get the credit for this because from what I know, the proposal to conduct a true-up of distribution charges came from Meralco itself.
Below is a disaggregation of the total charges from August 2011 to July 2018. I chose this period because this is the time that Mr. Non was ERC Commissioner and he had oversight function for Universal Charge in Missionary Electrification (UC-ME) and Feed-in Tariff Allowance (FIT-All). UC-ME is a subsidy to customers of off-grid islands and provinces while FIT-All is subsidy to renewable energy (RE) companies that provide intermittent power like solar and wind under the RE law of 2008 (RA 9513).
It turns out that generally there are flat rates for generation, transmission, and distribution-supply-metering (DSM) charges. Even for system loss, subsidies to lifeline rate customers, and taxes were generally flat.
What significantly increased were UC-ME, from only 10 centavos in 2011 to 44 centavos in 2018; and FIT-All, from 4 centavos in 2015 to 24 centavos in 2018 (Table 1).
Seven years ago, I wrote in this column, “Expensive electricity via Feed-in-tariff: which company received how much?” (July 6, 2016). I showed that there were millions and billions received by many RE companies. Then I wrote to Transco asking if my estimates were correct, they replied and I wrote about it, “Transco replies to queries about feed-in tariffs” (July 20, 2016).
So, I revised my computations based on Transco’s reply and it showed that of the P10 billion that RE companies received from FIT in 2015, the bulk went to EDC Burgos Wind (Lopez) P2.36 billion, Northern Luzon UPC wind (Ayala) P1.73 billion, Trans Asia Renewable Guimaras wind (Phinma) P0.66 billion, and Alternergy Pililla wind P0.46 billion.
The beneficiaries of “expensive subsidized wind-solar to save the planet” are not really small poor companies, and that data was for 2015 alone.
I recognize that Mr. Non has a point in limiting Meralco revenues to only distribution revenues and not gross revenues that include collections for generation and transmission charges, among others.
But while Mr. Non seems obsessed with Meralco when it comes to performance based regulation-related pricing, he seems silent on performance based regulation for the only remaining private monopoly nationwide — the National Grid Corp. of the Philippines (NGCP) — other distributors like private distribution utilities (DUs) and electric cooperatives (ECs), and generation companies (gencos) that do not know how to honor their supply contracts with Meralco.
On this, please notice these recent reports in BusinessWorld: “NGCP warns of power interruptions” (March 28), “ERC announces caps for grid market share, generating capacity” (April 3), “Meralco gains de-loading capacity” (April 4), “CA upholds ruling favoring San Miguel units” (April 5), “ERC, NEDA discuss ‘affordability index’ for power” (April 5), and, “Regulator to act on NGCP’s AS appeal this month” (April 16).
We are still being warned about power interruptions, even today, 33 years since the big blackouts started in 1990. Meralco has to enlist the support of big companies to turn on their fossil fuel-using generator sets to run in cases of high demand and low power supply. Two San Miguel gencos dishonored their supply contracts with Meralco, plus two more gencos are terminating their separate supply contracts.
Writers and columnists from other newspapers also pound on “non-affordable electricity” and the proposed electricity affordability index by the National Economic and Development Authority (NEDA) and ERC. Power security should trump power affordability because “cheap but not available” power — blackouts — is anti-consumers. The main reason why prices are high is because supply is tight and low relative to demand. Technically, P10-P15/kwh electricity is still cheaper and safer compared to using candles or gensets during blackouts.
Consider these two quotes from two articles here in BusinessWorld, nine years apart:
“… ensuring that the systems operator National Grid Corporation of the Philippines (NGCP) fully contracts what the system requires. The establishment of a reserve market has been long delayed.” — Romeo Bernardo, “The way forward for the power industry” (Jan. 26, 2014).
“… hundreds of MW of available capacity that remain stranded in various parts of the country as there are no transmission and/or distribution lines to bring them to the cities and the industries that need it badly.” — Romeo Bernardo, “Summer Cycles” (April 16, 2023).
So, this would be a challenge for Mr. Non and other electricity consumer advocates. Target them all for accountability — all or most DUs, ECs, gencos, FIT-entitled RE companies, and the NGCP. The NGCP, in particular, still fails to contract adequate and long-term reserves. I heard it even requires some gencos to advance the cost and effort to connect to the grid, and fails to complete its planned infrastructure on time. The Mindanao-Visayas Interconnection Project (MVIP) was originally set for completion in December 2020, this was moved to 2021, 2022, and hopefully it will be really operational by June 2023.
Many gencos were investigated in the past for supposed “withholding of capacity” and now gencos that blatantly dishonor supply contracts and withhold contracted capacity and somehow escape investigation. And there are provincial ECs that charge their hapless consumers up to P18-P23/kwh.
Finally, on “energy transition” from fossil fuels to renewables, especially solar and wind (S+W). I construct this table (Table 2) covering only three countries due to space constraints. I also introduce the concept of Coal/(S+W) ratio or CSWR to measure the dominance or non-dominance of coal over the two favored RE. The figures show the following:
In UK, there is no energy transition, only energy distortion where, as more S+W is added into the grid, the overall power generation declines. The CSWR has been low even since 2010.
In China and Vietnam, there is also no energy transition, only RE addition to rising coal and other non-RE power. The result is rising overall power generation and CSWR is high, especially in Vietnam.
While the UK and many European countries that embrace energy transition have very low anemic growth, China and Vietnam have very fast growth, which allows them to provide more jobs and businesses to their people.
So, government- and UN-directed “energy transition” is a deeply fictional and hypothetical narrative — it is not happening and will not happen.
The ones who should set any energy mix, any energy transition, should be the consumers. Not governments, not the UN, not environment and climate groups, not media, not climate consultants.
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See also:
BWorld 593, Low power supply and Meralco distribution cost, April 09, 2023
BWorld 594, Philippines to offer more investor returns than Europe, April 18, 2023
BWorld 595, Cancer spending and the budget, April 19, 2023.
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