Summer, power & the crying wolf

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WE had rains yesterday in some parts of the metropolis and finally it seems the land was able to breath from the scorching heat. Alas, it was like all the steam came out from the fissures of Metro Manila. Power is a big issue during summer when more Filipinos are using it twice or thrice the capacity due to mercury rising. And as we try to cool ourselves, stable supply and pricing become daily discussion topics in Filipino households.

Supply, because of what was framed as a potential crisis by Department of Energy (DOE) Secretary Jericho Petilla during the summer months; and pricing, due to the law of supply and demand.

The forecast was: “revealed that in Week 14 of 2015, a maximum projected shortfall of seven hundred eighty-two megawatts (782 MW) of which one hundred thirty-five megawatts (13SMW) is needed to meet the required regulating reserve, and six hundred forty-seven megawatts (647 MW) is needed to meet the required contingency reserve. Corollary, a total of two (2) weeks of red alert and fifteen (15) weeks of yellow alert is projected for the critical period.”

The summer power shortage is “attributed to the looming El Niño phenomenon, the maintenance shutdown of the Malampaya power plan, increased or continuing outages of power plants, and the delay in commissioning of committed power projects.”


The Senate and the House of Representatives were locked at the Bicameral conference level unable to agree on whether or not to pass on the cost of running privately-owned generator sets to consumers and on the Interruptible Load Program (ILP) wherein big power users (e.g. shopping malls, factories) will run their own generators when supply becomes lower especially during the summer months instead of plugging into the Luzon grid.

The upper chamber wants the cost of running the ILP charged to consumers, but the lower chamber is pushing for the government to reimburse the companies which signed up for the initiative by tapping the Malampaya Fund.

In an oversight meeting held last week by Mindoro Oriental Rep. Reynaldo Umali, chairman of the House Committee on Energy, the dire prediction of DOE on rotating daily blackouts of up to eight hours this summer in Metro Manila and other parts of Luzon did not happen.

Umali announced that from “March 1 up to the present, we have not had any brownouts despite the one-month maintenance shutdown of the Malampaya natural gas plant in Palawan. On the average, we have a daily net surplus of 1,500 megawatts and we have not even tapped ILP of about 1,100 MW. So if you add the two, we have a buffer of 2,600 megawatts,” he said. Umali also pointed out that the expected operation of Malampaya last 15 April would further boost supply.

It will be noted that Aquino and Petilla requested that they be allowed to procure modular generators from foreign suppliers. The generators would supply an additional 600 MW and would cost P12 billion over a two-year period starting this summer. Umali explained that “Congress rejected the deal and thus saved taxpayers at least P6 billion.” In addition to this huge amount saved, consumers have not paid even a centavo for ILP because the program has not kicked in due to stable supply.

For once, Congress did right in sitting on the proposed emergency powers for BSA3 to deal with a projected supply shortage in Luzon as well as prevented the another big ticket waste of buying generators, a band aid solution to supply.

But we should look beyond Luzon and focus on problems of Visayas and Mindanao too. Luzon and Visayas grids are interconnected by submarine cables. “The interconnection allows as much as 400 MW of electricity to transfer between grids on a daily basis, allowing plants for either side to provide power to both grids.”

Apart from problems of management which caused an island-wide trip recently, the Mindanao grid is “already operating on very thin reserve margins and there would be a stable supply if committed plants in 2015 will be online. These are 300 MW Coal Fired Therma South Energy Plant in Davao del Sur and the 200 MW Southern Mindanao Coal Powered Plant in Sarangani,” all fossil type plants. Insofar as the Visayas is concerned, no new capacities have been committed for at least “four years going forward.” “Peak demand in 2015 is seen at 1,711 MW and will rise to 1,744 MW in 2016 and to 1,840 MW in 2017. The DOE said 100 MW of additional capacity is needed in 2015 to maintain reliable reserves in 2017 while 2,000 MW is needed until 2030 to keep Visayas’ power situation stable.”

So summer is on a scorching roll out, power in terms of supply and price are hot button issues and yes, the wolf cried so loud it led to the cancellation of a genset fire sale.

We need a long term solution that will take into consideration an amendment of the EPIRA law which promised but failed to lower the price of power. Succinctly stated by Umali in his privilege speech in 19 June 2014, “13 years of unfulfilled promises of EPIRA, our electricity rates are highest in the region, and 9th in the world.” Umali concluded that supply is still unstable and unreliable. He likewise recommended the review of the Downstream Oil Deregulation Law.

Let’s refrain from worst case scenarios and push someone to always cry wolf, a design being made with the Bangsamoro measure too. At the end, we need to manage expectations of the Executive by a Congress willing to stand and fight for the people. It is time to assert the mandate of the people.

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