Critical power situation

Why do we usually expect brownouts whenever the Department of Energy (DOE) assures us that there is enough electricity supply?

The answer is lack of credibility.

This has been the sad state of governance, and one that assumes renewed importance given the latest concern on the power
situation. Despite assurances from the DOE of enough electricity supply, businessmen are worried that a power crisis is coming.

Two weeks ago, the DOE issued yellow alerts, warning that the supply of electricity was tight or too close to demand as some power plants go into scheduled maintenance.

Last week, however, the alerts turned red, meaning demand was more than what the system could supply. The result was rotating brownouts.

This has led to conspiracy theories from a number of government critics. Bayan Muna chair Neri Colmenares has urged an investigation of the simultaneous shutdowns involving five power plants in Luzon that put the grid on red alert last week. He claimed the shutdowns could be intended to create artificial shortages that would justify rate increases in the future.

However, the real reason for the seemingly thin difference between the current electricity demand and supply is the delay in the commissioning of new power plants designed specifically
to prevent shortages.

One example is the 600-megawatt power plant in Zambales proposed by Redondo Peninsula Energy Inc.—a partnership among Meralco, Aboitiz Power Corp. and Taiwan Cogeneration Corp.

In October 2012, the company was hopeful that it would be able to pursue the $1.28-billion coal-fired power plant at the Subic Freeport Zone.

At that time, it was awaiting the release of its environmental compliance certificate that would allow it to start the project. But that was not its only problem. The Supreme Court issued in
July that year a writ of kalikasan on the proposed 600-MW coal facility.

Based on the company’s plans then, the first 300-MW unit was supposed to start operations by 2015, followed by the second 300-MW unit.Fast forward to March 2018: The private proponent terminated a P46-billion engineering, procurement and construction contract for the power plant with Doosan Heavy Industries and Construction Co. Ltd. “due to delayed tariff approval for the project by the Energy Regulatory Commission” or ERC.

This project alone could have ensured enough supply buffer, especially in the summer months when demand for electricity rises.

The ERC is the government regulatory agency embroiled in corruption controversies that, at one point, led to the suspension of all its commissioners, thus holding approval of hundreds of crucial power supply agreements or PSAs.

These are contracts between power generators and distributors and a necessity for investors in new power plants, as these instruments ensure the sale of their electricity once the plants are up and running. Without such PSAs, construction of many power facilities is also delayed.

A group of consumer welfare advocates is correct in blaming the indecision of regulators and the courts on applications and cases related to new power plants for the current power situation that has caused rotating brownouts in many areas.

Laban Konsyumer president Vic Dimagiba noted that petitions were pending for years in the ERC and the courts, particularly for baseload power plants — generators that run round the clock — that would have added capacity to the grid.

The DOE and ERC better step up efforts to avert a full-blown power crisis. The DOE can revisit the comprehensive Power Action Plan for the Philippines that was developed by Japanese experts and presented to Manila by Japan’s Ministry of Economy, Trade and Industry in March 2017.

The proposed action plan aims to help solve electricity problems in the country by improving power-generation efficiency through the upgrading of existing coal-fired and hydroelectric plants and the use of the country’s abundant natural resources such as geothermal, wind and coal, among others.

The ERC, on the other hand, has to decide with efficiency whether to reject or approve the PSAs pending before it. Failing in this, the economic damage of a power crisis will be ruinous.