Analysis

Power price spike faces Mindanao

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(Concluded from Monday)

The Mindanao Development Authority (Minda) announced on March 21 “stopgap” measures intended to put an immediate stop to the power outages of up to nine hours that have gripped parts of the island for the past three  months. But the “immediate solution” comes at a heavy cost to the people of Mindanao.  They will be paying higher electricity rates. The government is passing on to them the costs of a bigger supply of electricity.

The Department of Energy said Mindanao was experiencing a deficit of 300 megawatts due to the rehabilitation of certain power plants and other factors affecting the operations of hydropower facilities in Bukidnon and Lanao, according to the report of the Inquirer team in the region.

As the government scrambled in panic to search for solutions to the worsening power deficit, Minda chair Luwalhati Antonino told the Inquirer team that “to ease the suffering of Mindanaoans,” at least three oil-fired generators will be commissioned starting in April as the rehabilitation of the Lanao facility  is carried out. The 59-year-old facility has deteriorated and can produce only about 570 megawatts, she said.

But the DOE said that even if the hydropower facilities resume normal operations, Mindanao will still have a power deficit because the existing power plants can produce only an estimated 1,181 megawatts while peak demand is expected to hit 1,484 megawatts this year. The outages have not spared  North Cotabato, which hosts the Mindanao geothermal power plants.  According to Vincent Baguio, spokesperson of the North Cotabato Electric Co-op (Cotelco), electricity consumers in the province have to endure up to seven hours of power outages daily even if the geothermal plants on Mount Apo produce a total of 104 megawatts.

Antonino said the power supply would improve starting in April when the Iligan diesel power plant starts to operate with an initial output of 20 megawatts. But a government source told the Inquirer team that Minda’s solution would prove to be expensive for consumers because of high petroleum prices.  Household consumers currently pay about P6 per kilowatt hour consumed, but this could increase to over P10 per kilowatt hour because of the use of the oil-fired power plants.

A regime of higher electricity costs to consumers appeared inevitable as President Aquino conceded on March 26 that the government might tap diesel-powered generating plants to boost the power supply in Mindanao between now and 2015. He also admitted that the mix of hydro and diesel would inevitably increase power rates.

“The power rates will go up in Mindanao because the choice is higher power or no power,” the President told reporters last week.  “And many of those we’ve spoken to understood the necessity of this, instead of no power at all.” This statement was equivalent to telling the people of Mindanao to go hang vis-à-vis the power rates. It’s like saying: Take it or leave it for all we care.

There is no relief in sight from the imminent rate increases. Energy Secretary Jericho Petilla presented to the President this week a plan that entails the procurement of “modular” diesel-powered plants as a “stopgap” measure until 2015 when the coal-fired plants kick in, according to Mr. Aquino.

“These diesel-powered plants are seen as the quickest—they can be set up in as early as six months and the maximum is one year,” the President said. The idea is for the government to help the distribution utilities  purchase the generating sets. “By 2015,” he said, “we expect the problem to largely go away—by that time we’ll have good surplus. That’s the time the power plants go on line. About 300 megawatts of coal-fired power will come online by 2015. There will be more after that up to 2017.”

But promises are cheap.  For about two months now, Misamis Occidental, Lanao del Norte, and Iligan City have been experiencing two power outages daily, with each round lasting two to six hours.  The Misamis Occidental Electric Cooperative Inc. said the outages were caused  by power supply deficiencies from the Agus and Pulangi hydroelectric plans operated by National Power Corp. At present, Mindanao has a power shortage of 294 megawatts. The demand is at 1,157 megawatts while the actual supply in only 863 megawatts.

The government think tank Philippine Institute for Development Studies (PIDS) warned in a study late last year of a repeat of the April 2012 power crisis in Mindanao in the summer of this year, and very likely in 2014.

The PIDS said the crippling power crisis in the hottest months of 2012 might recur because no additional baseload power-generating capacity has been installed in Mindanao. It said baseload power generation supplies the minimum or normal electricity requirements of consumers, including households, businesses and other organizations. PIDS senior research fellow Adoracion Navarro observed that electricity demand in Mindanao has continuously spiked through the years with rapid urbanization and increased industrialization.

Consolidated forecasts on demand for the period 2010-2019 showed an annual average demand growth of 4.28 percent in Mindanao, higher than the nationwide 3.63 percent. Navarro noted that, based on data from the DOE, power plants accounted for dependable generating capacity totaling 1,616 megawatts. However, about two-thirds of such capacity, or 1,038 megawatts, represented hydropower plants. These plants are being targeted by the government for privatization, abandoning the primary responsibility of the state to own and operate strategic industries essential to economic and industrial development.

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