Blacking out Mindanao

For most of Christian Philippines, it was the day the Son rose. For our Muslim brethren, it was the day darkness fell. Religion, however, had nothing to do with it. Inept energy governance did. All throughout the international investment community, foreign investors are realizing that simple glitches can stop a whole third of the Philippine economy in its tracks. The Easter Sunday systemwide power outage that totally blacked out Mindanao—caused, not by an uncontrollable natural calamity, but by the incompetent management of our generation and power transmission system—reveals critical weaknesses that have dire consequences for our economy and national security.

Note the fragility of an entire grid.

Initial reports indicate that the massive outage was caused by a detached conductor falling and coming in contact with a capacitor voltage transformer. This was preventable. Blackouts are rooted in deficiencies. There should have been constant maintenance checking and a strict compliance with reliability measures where protective devices are installed. These are the best practices globally. Why aren’t these standards applied and enforced here?

Maintenance is critical. The transformer and conductor were connected to the Agus-Pulangi hydroelectric power complex—a series of plants that cascade along a single tributary that snakes from Lanao flowing northwest and exiting in the upper part of Mindanao. Last year a widespread outage was also traced to a malfunction in the same complex.

This complex accounts for a substantial part of Mindanao’s generating capacity. It is owned by the financially-distressed and severely-undercapitalized National Power Corp., its electrons dispatched through a franchise granted to National Grid Corp. of the Philippines (NGCP), a utility owned by entities with substantial foreign interests, and operated by another totally owned by a foreign government—one with whom we have potentially incendiary territorial disputes.

Chew on that last tidbit. Foreign interests control a critical asset. The government’s ill-advised privatization program depended on commitments to spend for and maintain facilities. Almost immediately we can see grave vulnerabilities and looming worst-case scenarios should international conflicts escalate and worsen.

Whether the recent malfunctions were preventable or not, ultimately the government is accountable. Failing to install protective devices is not an act of God. That a whole grid relies on nonredundant facilities like a single line or a baseload generator, enough that a glitch can shut down a third of our archipelago, should raise red flags.

Contrary to Monday-morning-quarterbacking reports, the same massive outage can hit Luzon. It has happened before. Despite Luzon’s wider dispersion of generating plants, it can happen again. Outages are also a function of generating imbalances and transmission bottlenecks.

Electrical grounding due to the lack of protective devices might have shorted the system but, from a larger perspective, the absence of dispersed generating units caused the Mindanao outage. Mindanao’s plants cluster around the Agus complex and Northern Mindanao. Systemwide outages have occurred even when only one baseload facility goes offline—and similarly, when strategic transmission junctions fall and isolate Mindanao’s northern plants.

In Luzon, the largest generating units are in Pangasinan. When one of two units in one facility suddenly goes offline, that can cause eight-hour outages where smaller plants successively trip to fill in gaps. Moreover, there are transmission-line bottlenecks in our southeastern corridor that, when specific junctions are down, cause systemwide outages, isolating baseload plants in either the province of Quezon or the Bicol region.

What should have been done?

One, alternative transmission lines linking the Quezon and Bicol generating plants in Luzon and the Iligan and Cagayan de Oro plants in Mindanao should have been built. The concerned entities have been given enough time to comply with commitments. It’s about time we audited NGCP.

Two, plants the size of the Pangasinan facility should have been built in the last five years; these would have ensured adequate capacity and spinning reserves enough to prevent massive tripping cascades.

Three, the Grid Code should have been strictly enforced and updated. Authorities have done little to attune it to current investment demand. It’s a question of competence, or its opposite—lame-duck complacency.

Four, the Energy Regulatory Commission’s Grid Management Committee should have been shorn of insidious conflicts of interest and empowered as a transparent electric reliability organization similar to global best-practice agencies that police and enforce the Grid Code and compel compliance with reliability rules. Without those, commitments will be worth nothing. Breaches will continue. So might abuses.

Outages make a convenient case for energy carpetbaggers and opportunists who want to contaminate Mindanao’s substantially renewable energy mix with pollutive fossil fuels and higher tariffs. Analyze the recent Mindanao blackout under this light. Add serious national security issues, and we will realize just how dim our energy officials have been.

Dean dela Paz is a former investment banker and a consultant to the Joint Congressional Power Commission. He authored a book on energy governance tool kits and teaches finance, investment mathematics and corporate strategy.