Showing posts with label Sen. Loren Legarda. Show all posts

Saturday, February 27, 2016

Energy 58, Sen. Loren Legarda and renewables

Yesterday, I attended a forum on "Making Renewable Energy a Vehicle for Sustained Inclusive Growth” held at the International Finance Corporation (IFC, part of the WB Group), Bonifacio Global City, Taguig. The event was organized by the UPLB-CEMAFI. My friend Ozone who is a UPLB Economics alumni tagged me along.

They keynote speaker was Sen. Loren Legarda, a known environmentalist. She gave a litany of the threats of man-made climate change, the evils of coal power and the hosanna of renewables.

During the open forum, I was the first to comment. I mentioned the following:

1. Demonizing coal power and glamorizing wind, solar, other new renewables to replace coal is unrealistic. At the Meralco generation charge latest data, from wind-solar is zero, about 5% from WESM, the balance of around 95 % is from nat gas, coal, diesel power plants. At the DOE data as of the1st half 2015 in Luzon grid, about 51% of actual electricity production is from coal, only 1% from wind-solar-biomass, the rest are from nat gas, big hydro, geothermal.

2. So if we follow your advice of glamorizing wind-solar, there will be massive brownouts in the country. This building housing the IFC, WB offices will be running on noisy gensets running on diesel; there will be more road accidents at night, more crimes at night, as there will be little or no street lights; more fires as more people will use candles. So the social cost of displacing coal with intermittent renewables is very high.

3. Subsidies given to wind, solar, will make our "2nd most expensive electricity in Asia" become even more expensive because of feed in tariff (FIT) and renewable portfolio standards (RPS).

4. Climate change is natural and cyclical, warming-cooling-warming-cooling for the past 4.6 billion years.

She replied that she's not advocating the total banning of coal, only to reduce its share in the country's energy mix while raising the share of wind-solar-other renewables. She asked again my institute, I said Minimal Government Thinkers, an independent, non-govt think tank. She also asked where I got the data on climate change as cyclical, I said there are plenty of paleo-climate data available online free, one can choose whether the past 1,000 years, past 100,000 years, past 10 M years, 4.6 B years. They all show warming-cooling cycle.

She defended her position of course. I did not make follow up comments or questions because (a) she's the lady of the hour, she's the keynote speaker, and (b) it was not my intention to "win" a debate, only to speak my position in a public forum so others can hear the contrary views.

The Moderator was Atty. Jose Layug Jr., former DOE Undersecretary and now a Senior Partner, Puno Law Office.

The 1st panel discussion was on "Renewable energy project development: current state" and the speakers were (from left in the photo below):

1. Mr. Gaspar Escobar Jr., Chief, Renewable Energy Management Bureau (REMB) Technical Secretariat, DOE;
2. Mr. Peter Nepomuceno, Chairman and President, RASLAG, a solar company in Pampanga;
3. Mr. Rene Ronquillo, President and COO, HEDCOR, a hydro company with many hydro plants nationwide;
4. Dr. Bernardo Tadeo, President and CEO, Full Advantage, a biomass company.

The three gentlemen from the private sector shared their experiences in dealing with the various government bureaucracies like the National Commission on Indigenous People (NCIP), Department of Agrarian Reform (DAR), Department of Environment and Natural Resources (DENR), local government units (LGUs), etc. Simply put, it is costly, time-consuming and complicated to deal with them.

I briefly commented during the open forum that while the private players may be shy to recognize it, but such kind of bureaucratism by different agencies is somehow a legalized extortion. No one moves, no one starts a business, unless they get the signatures and permits of those regulators and agency officials. Hence, they must deal with the long paper work including the idiosyncracies of some or many of these officials.

The afternoon and 2nd panel discussion was about "Finance and Investments" in the RE sector. The speakers were (from left to right, photo below):

1. Atty. Deborah Layugan, Head, Market Operations Service, Energy Regulatory Commission (ERC);

2. Mr. Rustico Noli Cruz, AVP, Field Department, Development Bank of the Philippines (DBP);
3. Ms. Jo Ann Eala, VP and Head, Sustainable Energy Finance, Bank of the Philippine Islands (BPI);

4. Mr. Joseph Lledo, VP for Corporate Banking Group, BDO Unibank, Inc.;

5. Ms.Donna Gonzales, Senior Investment Officer, IFC; and

6. Mr. Yongbin Chen, Director, EQUIS. It owns many solar projects in Asia including the 132 MW solar plant in my hometown, Cadiz City, Negros Occidental.

Financing of RE projects is not my field, not my interest either. But during the open forum, I commented the following:

1. RE developers, their banks and financing institutions, should play down or not be proud of their power plants getting FIT. FIT allowance collected from all electricity consumers nationwide including those in Mindanao was P0.04+ (4 centavos) per kWh last year, and as mentioned by Atty. Layug, can rise to P0.17 to P0.21/kWh this year as more renewables are fed into the grid.

2. In Germany, when FIT was introduced in 2001 or earlier, the amount was 2% of the average monthly residential electricity bill. By 2014, FIT comprised around 22% of the average monthly electricity bill of residents, it just kept rising.

3. So whether we are talking of FIT in UK or Germany or the Philippines, FIT means expensive electricity and many people dislike or hate expensive electricity. So RE developers and their financiers should aspire for more innovation so that they can attain grid parity and survive even without FIT because RPS and "must dispatch" policy is already a big favor for them.

Being the only skeptic of the "hosannas of renewables" in a conference room is not exactly easy, but I think many people in the audience, even among the speakers, recognize the limits and dangers of expensive electricity from intermittent and unstable RE sources.

People want power stability, dispatchable upon demand and at the same time is affordable. If a power plant is designed for 200 MW, it should be capable of producing 200 MW running 24/7. With intermittent power, things are unstable, unpredictable, non-dispatchable, costs are high.

Many people and environmentalists pound on the "negative effects" of coal. Now consider these numbers:

In 2014, coal consumption of the following countries: US 434 million tons oil equivalent (mtoe); Germany 77.4 mtoe; Japan 126.5; S. Korea 84.8; Taiwan 40.9; Thailand 18.4; Philippines only 11.7 mtoe. Are the health, environment situation in the US, Germany, Japan, S. Korea, etc. worse than in the PH because they have much much bigger coal consumption than us? No.

In the Philippines, the biggest coal plants are in Batangas, Quezon, (western) Pangasinan and Zambales. I don't think that the health and environment situation there is much worse than those in Tarlac or Bulacan, M.Manila or Laguna.

Other people say that real effects of coal is global, not provincial or national. Yes, the global effect of coal is worldwide... prosperity. Energy is development. That is why even supposedly "green" countries like the US, Germany and Japan have high use and consumption of coal until now. If we are forced, arm-twisted to rely only on wind-solar-biomass-ROR hydro, we will be very dark at night and economically poorer than N. Korea or Zimbabwe.

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See also:

Energy 55, Old renewables and coal are cool, complementary and not contradictory, February 02, 2016

Energy 56, Cost effectiveness of different energy sources, February 05, 2016

Energy 57, Tony la Vina's anti-coal alarmism, February 06, 2016

Climate Tricks 51, The CCC, Greenpeace and fossil fuels, February 01, 2016

BWorld 39, Coal and renewables complement each other, January 26, 2016

BWorld 43, More on WESM, PEMC and DOE, February 14, 2016

Monday, November 26, 2012

Fat-Free Econ 31: On the Kasambahay, Solo Parents Welfare Bills

This is my article yesterday in TV5's news portal,

http://www.interaksyon.com/business/48867/fat-free-economcs--why-we-dont-need-the-kasambahay-and-solo-parents-bills
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State welfare is sometimes defined as “the politicians are well, taxpayers pay the fare.” This is true for taxpayers’ funded welfare and subsidy programs for the poor, like the conditional cash transfer (CCT), education and healthcare, housing and credit, train subsidy and tractors, or condoms and pills.

But there are other state welfare programs that are not funded by taxpayers. Instead, the government forces private enterprises and employers to provide mandatory price discounts to consumers, or mandatory high wages and other benefits to workers. Those caught violating will penalized. Examples of this type of welfare are the minimum wage law and mandatory discounts to senior citizens and persons with disabilities.

There is a measure that is expected to become a law soon - the “Kasambahay Bill” or “Domestic Workers Act” lodged as Senate Bill No. 78 and House Bill No. 6144. The bicameral conference committee has already approved a common measure this week. Among the provisions of the unified bill are:

- Monthly minimum wage of P2,500 in the National Capital Region, P2,000 in chartered cities and first class municipalities, and P1,500 in other municipalities;
- Kasambahay entitled to other social benefits such as Social Security System, Philhealth, and Pag-Ibig Fund, with employers shouldering the premium payments if the helpers receive a monthly salary below P5,000; and
- Kasambahay should have a written contract specifying the terms of employment, a pay slip, daily and weekly rest periods, service incentive leave of five days with pay, 13th month pay, and so on.

The premise is that domestic workers are generally exploited by their employers and so must be protected by the state. This logic can be faulty. Hiring of domestic helpers is a private and often intimate contract with workers who often live in the house of the employers and know many confidential and sensitive information about the household.

It is hardly possible for employers to maltreat their kasambahay as they will be exposing themselves and other family members to danger when the kasambahay will not do their work properly. Like a nanny who fails to attend just for a minute to a baby who climbs the stairs or a high chair, then falls down.

Employers often grant salaries and other perks more than necessary to inspire their kasambahay to do their work well, and make them stay long with the family. There are many instances when a yaya would take care of a baby until he/she becomes an adolescent. The employers no longer treat them as ordinary domestic workers but as extended family members.

Lazy, inefficient or rumor-mongering workers are usually fired by their employers, rendering the mandated welfare moot and useless. In the same vein, abusive employers also lose their good workers in just a few days or months. This is a penalty worse than government-mandated penalties and fines as the household heads can hardly work in their offices since they have to take care of the kids, suffering a steep decline in productivity.

The bottom line is legislative measures like the Kasambahay Bill are generally unnecessary.

Then there are two Senate bills that want to give various mandatory discounts to solo parents. SB 2563, which Senator Manny Villar introduced, seeks to amend Republic Act No. 8972 or the “Solo Parents Welfare Act of 2000,” giving additional benefits to solo parents, including a 20 percent discount on all purchases of milk or formula products, diapers, medicines and supplements, other necessary infant items for children 0-4 years old.

SB 1439 by Sen. Loren Legarda provides the following additional benefits to solo parents:

- 10 percent discount on all purchases of clothing materials for children 0-2 years old;
- 15 percent discount on all purchases of baby’s milk, food and food supplements for children 0-2 years old; and
- 15 percent discount on all purchases of medicines and other medical supplements/supplies for children 0-5 years old.

There are serious flaws in these two bills forcing companies to give mandatory discounts.

One, they assume that all solo parents in the country are poor or financially distressed. This is not true. Some solo parents are rich or have rich family members who can give them assistance in cash or kind.

Two, the bills assume that all shops, manufacturers and traders that produce or sell these goods are rich or financially stable and hence, can afford to give such discounts without adversely affecting their financial conditions. Again this is not true. While some companies are financially stable, others are not or may even be on the brink of bankruptcy due to various financial, economic and social challenges here and abroad.

Three, the bills assume that even financially unstable shops, manufacturers and importers of these products will continue selling these goods. This is wrong. One result of the implementation of RA 9994 or the “Expanded Senior Citizens Act of 2010” - which requires 32 percent discount on medicine purchases - is that small drugstores that cannot afford to keep selling medicines at a loss have stopped selling essential medicines to senior citizens. Senior citizens living in small and rural municipalities have to travel farther to bigger cities so they can buy at Mercury or other large chain pharmacies.

This proves again that Newton’s third law of motion - “For every action, there is an equal and opposite reaction” - can also apply in economics. This can be aptly restated thus: “For every government intervention to force welfare, there is an equal and opposite reaction that results in dis-welfare."

The economic tensions in Greece, Spain and other European economies that are limping from heavy public debts are additional proof that heavy welfarism can create more long-term harm than benefits. The bills on Kasambahay and Solo parents, as well as many other welfarist programs should be abandoned. Government should focus on promulgating the rule of law, protecting property rights and the citizens’ basic freedom, instead of forcing equality among people.

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See also:
Fat-Free Econ 27: Sin Tax and Nannyism, October 22, 2012
Fat-Free Econ 28: Poverty, Planning and Populism, October 29, 2012
Fat-Free Econ 29: Anti-capitalism, Fanaticism and the Poor, November 13, 2012
Fat-Free Econ 30: BPOs and Obama, November 14, 2012

Tuesday, October 23, 2012

Welfarism 23: Letter to Sens. Cayetano and Pangilinan on Solo Parents Welfare

This is my letter to two Senators which I faxed to their respective offices late afternoon today.
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23 October 2012

Hon. Pia S. Cayetano

Chairperson

Committee on Youth, Women and Family Relations

Hon. Francis N. Pangilinan

Chairperson

Committee on Social Justice, Welfare and Rural Development

Senate of the Philippines

Pasay City

Dear Senators Cayetano and Pangilinan,

While the State has the obligation to protect the citizens’ right to life, private property and liberty, it may have no right to force and coerce private enterprises to give mandatory discounts to their consumers if these companies are already paying the required taxes and complying with various health and regulatory requirements.

The provisions of two Senate Bills amending RA 8972 or the “Solo Parents Welfare Act of 2000” seem to go along this practice. To give additional benefits to solo parents, SB No. 2563 by Sen. Manny Villar provides these mandatory discounts:

(A) TWENTY (20%) PERCENT DISCOUNT ON ALL PURCHASES OF MILK OR FORMULA PRODUCTS AS WELL AS DIAPERS AND OTHER NECESSARY INFANT ITEMS;

(B) TWENTY (20%) PERCENT DISCOUNT ON INFANT MEDICINES AND SUPPLEMENTS. INFANT SHALL REFER TO CHILDREN AGED 0- TO 4 YEARS.

And SB No. 1439 by Sen. Loren Legarda provides the following additional benefits to solo parents:

(1) TEN PERCENT (10%) DISCOUNT FROM ALL PURCHASES OF CLOTHING AND CLOTHING MATERIALS FOR THE CHILD MADE WITHIN A PERIOD OF UP TO TWO (2) YEARS FROM THE CHILD'S BIRTH;

(2) FIFTEEN PERCENT (15%) DISCOUNT FROM ALL PURCHASES OF BABY'S MILK, FOOD AND FOOD SUPPLEMENTS MADE WITHIN A PERIOD OF TWO (2) YEARS FROM THE CHILD'S BIRTH;

(3) FIFTEEN PERCENT (15%) DISCOUNT FROM ALL PURCHASES OF MEDICINES AND OTHER MEDICAL SUPPLEMENTS/SUPPLIES FOR THE CHILD MADE WITHIN A PERIOD OF FIVE (5) YEARS FROM THE CHILD'S BIRTH; AND

There are serious flaws in these two bills forcing companies to give mandatory discounts. Among them:

1. They assume that all solo parents in the country are poor or financially distressed and hence, the need to give them mandatory discounts for their young children’s needs. This is not true. Some solo parents are rich themselves or have rich family members who can give them various assistance in cash or in kind.

2. They assume that all shops, manufacturers and traders that produce or sell these goods are rich or financially stable and hence, can afford to give such discounts without adversely affecting their financial conditions. Again this is not true. While some companies are financially stable, others are not or may even be in the brink of bankruptcy due to various financial, economic and social challenges here and abroad.

3. They assume that even financially unstable shops, manufacturers and importers of these products will continue selling these goods. This is wrong. One result of the implementation of RA 9994 or the “Expanded Senior Citizens Act of 2010” where senior citizens are given mandatory discount of 20 percent plus 12 percent VAT free or 32 percent effective discount on medicines, not tax creditable, is that small drugstores that cannot afford to keep selling medicines at a loss have stopped selling essential medicines to senior citizens. Those living in small and rural municipalities have to travel to bigger cities that are far away so they can buy at Mercury or other large chain pharmacies.

This proves once again that Newton’s third law of motion, “For every action, there is an equal opposite reaction”, can also apply in economics. This can be aptly restated as “For every government intervention to force welfare, there is an equal opposite reaction that results in diswelfare.”

Drug Price Control 27: Letter to Sen. Pia Cayetano

Last Thursday, May 10, after attending the meeting of the Congressional Oversight Committee on RA 9502, I went to the office of Sen. Pia Cayetano and gave this letter.
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10 May 2012

SEN. PIA S. CAYETANO
Chairperson
Committee on Health and Demography
Senate of the Philippines
Pasay City

Dear Sen. Cayetano,

We would like to submit our position paper on SB 5 of Sen. Loren Legarda and SB 2960 of Sen. Manny Villar, creating the Drug Price Regulatory Board, Amending RA 9502.

The current drug price regulation and control policy (EO 82 mandating MDRP, and DOH Advisory Council Resolution No.2009-001 on GMAP) will turn three years old this coming mid-August. There are many indicators showing that the policy is a failure in its stated goal of making certain drugs affordable to the poor.

Here are the reasons why:

1. The policy contradicted, if not defeated, the goals of RA 6675, the “Generics Act of 1988”. That law was successful in promoting cheaper generics, off-patent drugs to the public. The drug price control policy however, encouraged people to shift back to the branded and innovator drugs made by multinational pharmaceutical companies as they have been coerced by the government to slash prices by 50 percent.

2. The policy benefited the rich and upper middle class who would be buying those drugs whether their price remained at prevailing or discounted levels. Many if not all of the 22 drug molecules that were covered by the policy have cheaper, off-patent competing drugs already available. The poor were patronizing the off-patent drugs, which are still cheaper than branded drugs even if their prices were slashed by half.

3. The policy has adversely affected many local generic manufacturers. If they were selling their drug at P8 per tablet vs. the multinationals’ P15, the locals would make enough profit as the poor will patronize their products because of the big price differential. After the price control, the P15 becomes P7.50 and the local generic manufacturers now have the “more expensive” drugs. If they have enough leeway to further bring down their price to only P4 or lower without sacrificing the quality and safety of their drugs, fine.

But if they do not have enough leeway, then they will be forced to pull out their drugs rather than sell at a loss. Or worse, simply close down if the affected drugs are the main products of that generic manufacturer.

Climate Tricks 8: Catastrophic Scare for Climate Money

Here is another proof that the catastrophic anthropogenic global warming (CAGW) is mainly about money-money.

A bill in Philippine Congress, called the "People's Survival Fund" (PSF) bill, authored by Cong. Erin Tanada et al in the lower House, and Sen. Loren Legarda and other Senators in the upper Chamber, wants to distribute millions, or billions of pesos of tax money to local governments and possibly environmental NGOs to improve climate change adaptation and mitigation. This is on top of existing "fight climate change" laws and programs. The bill will also create a new bureaucracy, the PSF Board, under a new bureaucracy, the Climate Change Commission (CCC).

And why so? This news was written and published in December 2007, suggesting that by end of summer this year, ie, around 3rd week of September 2012 or just four months from now, the Arctic will be ice-free. Scary.

Original source: http://news.nationalgeographic.com/news/2007/12/071212-AP-arctic-melt.html

Reposted in: http://wattsupwiththat.com/2012/05/12/the-arctic-ocean-could-be-nearly-ice-free-at-the-end-of-summer-by-2012/#more-63430

This prognosis is similar to another prediction made in January 2007 saying that up to 4.5 billion people could this this year due to "global warming-related causes" -- so guys, take cover! See, Climate Tricks 1: 4.5 Billion People to Die This Year, January 03, 2012.

Meanwhile, here are more recent stories from more realistic, non-alarmist climate change analysis.

Fat-Free Econ 8: Drug Price Regulation is Wrong

This is my article today in TV5's news portal.

I sent this to two Senators who authored a Senate Bill creating the Drug Price Regulatory Board. See my email to them after this article.

http://www.interaksyon.com/article/31003/fat-free-economics-the-folly-of-drug-price-regulation

FAT-FREE ECONOMICS: The folly of drug price regulation

04-May-12, 2:08 AM | Nonoy Oplas

Government regulation and control of the price of something that it has not produced or manufactured is wrong and parasitic. Drugs are "expensive" because of government taxes and fees slapped on the product and the producer as well as the seller.

The current drug price control policy will turn three years old in August. There are many indicators showing the policy is a failure in its stated goal of making certain drugs affordable to the poor.

Now some legislators want to compound the folly by creating a new layer of bureaucracy called the Drug Price Regulatory Board (DPRB) under the Department of Health (DOH).

Why is drug price control or regulation wrong? Here's why:

1. The policy contradicted, if not defeated, the goals of the Generics Act of 1988. That law was successful in promoting cheaper generics, off-patent drugs to the public. The drug price control policy however, encouraged people to shift back to the branded and innovator drugs made by multinational pharmaceutical companies as they have been coerced by the government to slash prices by 50 percent.

2. The policy benefited the rich and upper middle class who would be buying those drugs whether their price remained at prevailing or discounted levels. Many if not all of the 22 drug molecules that were covered by the policy have cheaper, off-patent competing drugs already available. The poor were patronizing the off-patent drugs, which are still cheaper than branded drugs even if their prices were slashed by half.

3. The policy has adversely affected many local generic manufacturers. If they were selling their drug at P8 per tablet vs. the multinationals’ P15, the locals would make enough profit as the poor will patronize their products because of the big price differential.

After the price control, the P15 becomes P7.50 and the local generics manufacturers now have the “more expensive” drugs. If they have enough leeway to further bring down their price to only P4 or lower without sacrificing the quality and safety of their drugs, fine. But if they do not have enough leeway, then they will be forced to pull out their drugs rather than sell at a loss. Or worse, simply close down if the affected drugs are the main products of that generic manufacturer.

4. The policy has introduced business uncertainty. Someone with a really innovative, creative and revolutionary product like a disease-killer drug, might hesitate bringing their products to the Philippines knowing that the politics of envy can hit them anytime.

5. Price control simply means price dictatorship. The government is dictating to the industry regardless of the cost of production and marketing, the cost of taxes and fees. Those companies must sell their products at a level that was set and dictated by the government. Otherwise, they will be penalized.

6. The policy did not recognize that government taxation of medicines - three- to five percent import tax, plus 12 percent value-added tax and local government taxes - is partly to blame for expansive medicine.

7. Competition among more drug manufacturers, drug retailers and pharmacies is the best price regulator, not more government regulation and coercion.

In this regard, the creation of the DPRB is also wrong for at least two reasons:

1. It will add another layer of bureaucracy in the government, which will require another set of budgetary allocation each year. With a P300 billion annual budget deficit, the government should think of how to reduce spending and eradicate the need for more borrowings.

2. The DOH Advisory Council on Price Regulation, the body that deliberated the implementation and monitoring of the price control since mid-August 2009, has been transformed into the Advisory Council for Healthcare because there is general recognition by the Council members, including the federation of local generic manufacturers, the Philippine Chamber of Pharmaceutical Industry (PCPI), that price control did not work.

The Advisory Council is not a permanent body although it may have permanent members. Thus it is easy to transform itself and focus its discussions and energy on more important issues like universal healthcare, not just drug pricing. A permanent drug regulation body will only become a white elephant implementing and monitoring a bad policy.
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from:		Nonoy Oplas minimalgovernment@gmail.com
to:		"Sen. Manny Villar" <mb_villar@yahoo.com>, "Sen. Villar" <mbv_secretariat@yahoo.com>, "Sen. Loren Legarda" <loren@lorenlegarda.com.ph>
date:		Fri, May 4, 2012 at 2:03 PM
subject:		On your SB, Drug Price Regulatory Board

Dear Sen. Villar and Sen. Legarda,

I have read from the news that you have authored a bill creating a new office called the Drug Price Regulatory Board. I think that proposal is not wise. May I share with you my article today why price control/regulation is wrong, and why creating a new bureaucracy for this policy is equally wrong.

Should you have a Senate Committee Hearing on the said subject, kindly inform me and I would like to attend and verbalize this position.

Thank you very much.

Sincerely yours,

Bienvenido "Nonoy" Oplas, Jr.
President, Minimal Government Thinkers, Inc.
http://funwithgovernment.blogspot.com

http://minimalgovernment.net

Columnist, http://thelobbyist.biz

Columnist, http://interaksyon.com
Author, Health Choices and Responsibilities
Mobile: +63915-8204616

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http://www.interaksyon.com/article/31003/fat-free-economics-the-folly-of-drug-price-regulation