BWorld 688, On the nuclear mission in Canada, the AP-MGen-SMC partnership, and electric cooperatives

On the nuclear mission in Canada, the AP-MGen-SMC partnership, and electric cooperatives
March 7, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/03/07/579978/on-the-nuclear-mission-in-canada-the-ap-mgen-smc-partnership-and-electric-cooperatives/

TORONTO — It is my first time to set foot in Canada. Our plane from Hong Kong landed in the evening and I saw from the air how extensive the bright lights of Toronto are — amazing and fantastic! This is clear proof of a country’s level of development and industrialization — that it has a huge supply of power that is efficiently distributed at competitive prices to wide areas of the country.

I will be discussing four energy topics in this column.

PHL NUCLEAR TRADE MISSION TO CANADA

I am participating in Canadian government-organized events in Ottawa, Toronto, and Saskatoon from March 4 to 12. The Philippine delegation is headed by Energy Undersecretary Sharon Garin, Science Undersecretary Leah Buendia, Energy Regulatory Commission (ERC) Chairperson Monalisa Dimalanta, Philippine Nuclear Research Institute Deputy Director Vallerie Samson, officials from the Philippine embassy in Ottawa, the Philippine consulate in Toronto, and officials from the Canadian embassy in Manila. There are also participants from Philippine private corporations: Aboitiz Power, Meralco, and Prime Metro BMD. And a few members from Philippines media, me included. But we will participate only in the Toronto leg, from March 6-8. The formal events will start today and I will write about them next week.

I believe that the small modular reactors (SMRs) will be viable in off-grid islands and provinces that currently have up to 99% of their energy needs provided by diesel/bunker oil gensets. They have frequent blackouts; their power cost is expensive and made “affordable” only via the subsidy that is the universal charge for missionary electrification (UC-ME) that is slapped on all on-grid consumers nationwide. Many potential investors fear blackouts and expensive energy and hence, job creation on these islands is limited.

There are many small industrialized countries which have big power supplies. They have been using nuclear power for many decades and have had no nuclear accidents (I list them in Table 1). Small countries like Slovenia, Slovakia, and Bulgaria generate 2,500+ kWh per capita from nuclear energy alone. Meanwhile, in 2022, the Philippines generated a total of only 1,000+ kWh per capita of power from all energy sources.

MGEN, AP, SMGP PARTNERSHIP

Last Friday, three of the largest power companies in the country — Meralco PowerGen Corp. (MGen), Aboitiz Power Corp. (AP) and San Miguel Global Power Holdings Corp. (SMGP) — launched the Philippines’ first and most expansive integrated liquefied natural gas (LNG) facilities in Batangas. AP and MGen will invest jointly in two of SMGP’s gas plants — the existing 1,278-megawatt (MW) Ilijan power plant and the new 1,320-MW combined cycle power plant which is expected to start operations by end-2024. See this report in BusinessWorld: “MGen, AboitizPower, and SMGP sign $3.3-B deal for Batangas LNG facility” (March 4).

I like this development as it further ensures our energy security, so I congratulate the companies. I like these quotes from the heads of the three power conglomerates from the press release that was issued.

“Apart from transforming the energy landscape of the Philippines, this symbolizes a milestone alliance among major players in the energy industry towards a more sustainable future. We are thrilled to have such reliable partners as we lay the foundation for a brighter, greener future,” said MGen Chairman Manuel V. Pangilinan.

AP Chairman Sabin M. Aboitiz noted, “Both LNG and renewables are needed to achieve a balanced energy mix and well-planned energy transition. Above all, this is a big win for the Philippines and the people. Economic development is impossible without energy security.”

SMGP Chairman and President Ramon S. Ang said, “For the first time, three leading power companies are working together to secure our country’s energy needs while transitioning towards cleaner power sources. This represents a major leap forward for our energy future, ensuring not just reliability but also cost-efficient power for many Filipinos.”

In a separate press release, AP President and CEO Emannuel Rubio was quoted as having said, “We continue to diversify our generation portfolio and increase our capability in energy security in the Philippines through a minority share in the first integrated LNG facility, to keep the lights on.”

For Table 2, I looked at the financial conditions of these three players and I included FirstGen as it is a big gas company too. I notice that the four big power companies have a combined gross revenue of about P1 trillion.

When converted to US dollars, that’s only $17.9 billion gross — “small” compared to most energy companies in the ASEAN-6 and developed East Asia.

THE VISAYAS’ TIGHT POWER SUPPLY

From the monthly operations report by the Independent Electricity Market Operator of the Philippines (IEMOP) one sees that the average power margin (supply minus demand) is about 2,500 MW in the Luzon grid, about 1,200 MW in the Mindanao grid, and only around 300 MW in the Visayas grid. Thin reserves and small margins mean the grid is courting yellow-red alerts or near-actual rotating blackouts, that prices are high, and consumers are forced to cut their electricity use — not good.

Of the roughly 1,850 MW average demand in the Visayas grid, about half of it goes to Cebu alone, and the other half is shared by the sub-grids in Negros, Panay, and Samar-Leyte. Expansion of a coal plant in Cebu is being planned, but instead of welcoming it, some blackout-friendly environmental activists are lobbying that it should be discontinued because… climate. When there are frequent blackouts, the poor use more candles while the rich use more diesel-powered gensets. More candles often lead to fires, the destruction of property and injury or death. Today, not decades from now.

The national and local governments, local businesses and consumers should prioritize 24/7 electricity and job creation, not scare people about what will happen to the climate 50 or 100 years from now.

COSTLY ELECTRIC COOPERATIVES

In my recent column “On electric cooperative cases at the ERC, renewables, and food inflation” (Feb. 29), I forgot to emphasize that many electric cooperatives (ECs) in the country are indeed abusing their consumers with expensive rates that have no regulatory approval, and that some of these ECs have already been penalized by the ERC but are still awaiting the implementation of fines and penalties. The ERC people might be over-worked since there are 120+ ECs to monitor monthly nationwide.

This is another reason why there should be mergers and consolidation of ECs nationwide. I wrote here before that in my province Negros Occidental, there are five ECs, plus another three in Negros Oriental, or eight ECs in just one island. Meaning that the ERC has to monitor and evaluate eight ECs every month in Negros Island. I believe there should be only one corporate distribution utility (DU) in Negros Island, another single DU in Panay Island, and so on. This would result in economies of scale for the DU, less work for the regulators, and lower electricity cost for consumers.
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See also:
BWorld 685, The economic impact of 2 years of war in Ukraine, and the Philippines fiscal situation
BWorld 686, On electric cooperative cases at the ERC, renewables, and food inflation
BWorld 687, High budget deficit and wage subsidy