Home Opinion Editorial ERC risking energy crisis for principle

ERC risking energy crisis for principle

CRITICIZING a government agency for strictly adhering to rules and procedures would ordinarily be an inconsistent and irresponsible thing to do, but we believe an exception can and should be made in the case of the Energy Regulatory Commission (ERC).

The ERC has refused to permit the approval for the operation of a new, 455-megawatt (MW) power plant to proceed any faster than the written regulatory procedures allow, which would be a proper approach under normal circumstances. Present circumstances, however, are not quite normal: Within a few days, Luzon may be facing electricity shortages as at least three power plants and the Malampaya gas field facility will be undergoing scheduled maintenance.

Scheduled for complete or partial shutdown in October are the Ilijan Unit 1 (600 megawatt), which will be offline from October 3 to October 15, and operating at reduced capacity from October 16 to October 18; Sual Unit 2 (500 MW) from October 19 to November 17; and San Lorenzo Module 50 (250 MW) from October 26 to October 30.

The Malampaya facility will be shut down for maintenance between October 12 and October 15, which will affect the operations of the Santa Rita (1,000 MW); San Lorenzo (500 MW); Ilijan 1 and 2 (1,200 MW); San Gabriel (414 MW); and Avion (97 MW) power plants.

The nation’s largest electricity distributor Meralco has estimated that between 600 MW and 900 MW of capacity will be unavailable for the Luzon grid during October and part of November. The company expressed cautious confidence that it would have sufficient energy supplies available if everything goes as planned, but is obviously keeping in mind the real possibility that everything will not go according to plan. Over the past several years, these seasonal maintenance shutdowns have been accompanied by other, unexpected plant outages so often that it has almost become routine.

That is why Meralco has petitioned the ERC for the fast approval of a certificate of compliance (CoC) to operate its new 455-MW coal-fired generating plant in Mauban, Quezon. The P56.2-billion plant is owned by San Buenaventura Power Ltd. Co. (SBPL), a joint venture of Meralco PowerGen Corp., the power generation arm of Meralco, and New Growth B.V., a wholly owned subsidiary of Electricity Generating Public Co. Ltd. of Thailand. According to Meralco, the plant is ready for operation, and could have begun supplying power to the Luzon grid on September 15, if not for the delay in the ERC’s issuing the necessary authorization.

Energy Secretary Alfonso Cusi has sided with Meralco, urging the ERC to approve the SBPL plant in a letter to ERC commissioners last week. “That supply is necessary to augment the present supply of the country,” Cusi explained in an interview.

The ERC, led by Commissioner Agnes Devanadera, remains unmoved by this, insisting that its consumer protection mandate obliges it to submit the approval of the CoC to the full regulatory process, which could take up to 60 days. The reason for this, Devanadera also explained, is that the ERC must ensure that the distributor (Meralco) has signed a power supply agreement with SBPL that provides electricity at the least cost.

That is an admirably consumer-friendly position. It is exactly what the law specifies, but with the looming power plant shutdowns, it is completely wrong on two counts. First, the ERC does have it within its power to withdraw or modify its approval if it later finds that consumers are disadvantaged by it. Second, if Meralco is not able to source its power supply needs from its existing providers because of the plant shutdowns, it will have to buy additional supply from the Wholesale Electricity Spot Market, which will result in higher prices for consumers.

Ensuring sufficient electricity supplies are available at all times is a bigger consumer protection mandate than monitoring prices. The ERC should honor that mandate, and bend its rules to permit the SBPL plant to operate.

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Today’s Front Page December 13, 2019

Today’s Front Page December 13, 2019