Risky powers

Since 2012, the government had been warned that a shortage of electricity was very likely by 2015. President Aquino ignored the warning, but now he wants emergency powers to tackle a power crisis predicted inevitable in the summer of next year.

The President announced his intention at the launch last Sept. 12 of the Pagbilao III power plant project, which is expected to add 300 MW to the Luzon grid but only by 2017. He is seeking a joint congressional resolution allowing the government to “contract” additional generating capacity of 600 MW. While he attributed the increased electricity demand to the Philippines’ “economic resurgence,” the Department of Energy was more specific as to the cause of the impending shortage: power plant outages, anticipated delays in the commissioning of committed power projects, the scheduled maintenance of the Malampaya gas platform to make way for a crucial expansion, and the expected effects of El Niño on hydroelectric power plants.

Energy Secretary Carlos Jericho Petilla estimated that at least P6 billion would be needed to address the power shortage in Luzon in 2015. The amount covers only the rental of power capacity from diesel-powered generators. If the money is taken from the Malampaya Fund, then consumers would be spared a rate increase. The government is also banking on the rehabilitation of the old Malaya coal-fired power plant in Rizal. The rehabilitated plant could deliver 300 MW of additional capacity for the Luzon grid by the summer of 2015, but even Petilla is not sure if work on the facility could be completed before crunch time.

Renting diesel-fed generators would be bad news to consumers, especially if the law governing the use of the Malampaya Fund would not allow its use for such a purpose. This would mean increased power rates. Consumers would not want a repeat of the Ramos experience. During his term, President Fidel Ramos sought—and was granted—authority to enter into negotiated contracts for additional generating capacity. Pushed to the wall by a severe power shortage, his administration guaranteed the returns on the investments made by private investors, mainly in huge generators. This eventually led to high power rates.

Criticism of the government plan to rent expensive generators to meet the demand in 2015 is understandable. The group People Opposed to Unwarranted Electricity Rates (or Power), for instance, argues that the government need not rely on renting power generation sets and should instead build solar-powered plants in the short term because construction would take only three to six months. Funding can be legally and readily taken from the P270-billion Malampaya Fund, the group adds.

Others cite alternative options, such as the Interruptible Load Program or ILP, where big power consumers with generator sets may self-generate electricity to ease demand from the grid at peak hours, in return for fuel cost reimbursement and some compensation. The program also taps those with spare generators like malls and export zone locators to sell their excess capacity to the grid. The government will compensate the generator owners upon approval of the Energy Regulatory Commission.

Even Senate President Franklin Drilon is uncommitted in meeting the President’s request. He said last week that the government had yet to examine other options to avert a power crisis aside from granting Mr. Aquino emergency powers. Drilon said he wanted to know if renting generating sets was the only solution available to the government. He also pointed out that certain facilities were not being fully utilized, such as the Ilijan power plant in Batangas, which cannot operate at capacity simply because it does not have a warehouse for fuel.

While we all want to avert a power crisis in 2015, granting the President emergency powers may not be the most prudent action. Consumers would not want a repeat of the Ramos era’s emergency power-generation program, which resulted in very expensive electricity that we continue to endure today. At that time, the country was in such dire need of power supply that it had to accept any offer from private contractors, even at a steep price. But the situation is very different today. The President has other options that can be much cheaper than spending P6 billion in taxpayer money just to rent generators.

This editorial was further edited to remove a factual inaccuracy involving a court case.