PNoy seeks extra power on energy

Belmonte, critics wary, ask Palace to explain

PRESIDENT Benigno Aquino III will seek emergency powers from Congress to allow him to contract additional generating capacity to address a power shortage next year, but Speaker Feliciano Belmonte wants to know the basis for Aquino’s request even as administration critics say this will lead to higher rates through sweetheart deals and take-or-pay agreements that force consumers to pay even for unused electricity.

At a speech during the opening of the 420-megawatt Pagbilao III coal plant Thursday, the President consciously avoided the words “emergency powers,” but Communications Secretary Herminio Coloma said Section 71 of the Electric Power Industry Reform Act will be invoked.

Symbolic switching. President Benigno Aquino
leads (from left) Jon Ramon Aboitiz of Aboitiz
Equity Ventures, Energy Secretary Jericho
Petilla, Erramon Aboitiz of Aboitiz Power Corp.,
Naomi Hirose of Tokyo Electrical Power Co.
and Mamoru Sekiyama of Marubeni Corp. in
ceremonially starting the countdown to the
completion of the 420-megawatt Pagbilao II
power plant at the Fairmont Hotel in Makati City.
“That is the specific provision of the law and that is the basis of the statement of the President. The law stated in very clear terms that the President may do what he said he will do in order to address a shortage in supply,” Coloma said when asked to clarify if Aquino was seeking emergency powers.

Section 71 states that the President, upon determination of an imminent shortage of supply of electricity, may ask Congress for authority, through a joint resolution, to establish additional generating capacity under such terms and conditions as it may approve.

“To be more efficient and impactful in our efforts, very soon, we will formally ask Congress for a joint resolution, that will authorize the national government to contract an additional generating capacity to address the 300-megawatt projected deficit, and, on top of that, to have sufficient regulating reserves equivalent to 4 percent of peak demand, for another 300 megawatts,” Aquino said in his speech.

“Let me assure our partners from the private sector: government intervention will be focused solely on addressing the projected shortage. We have no plans of intervening to distort the market or complicate the situation even further,” the President added.

He said the Energy Department will also continue to solicit participation for its Interruptible Load Program until next year.

Under the ILP, incentives will be given to businesses that use their own generators during peak hours.

However, the DOE was only able to get a commitment of 27 megawatts from the private sector for the program.

“The entire power situation is exponentially more complicated. Forced power-plant outages have been observed to rise especially in the summer months, coinciding with the periods of peak demand. This situation results in quite thin reserves, particularly in Luzon,” the President said.

“There are the many other factors that affect our power supply adversely: weather phenomena such as El Niño and the typhoons that visit our country every year; the de-rating of plants due to unforeseen problems; and delays in the construction of power plants; and various legal challenges to the setting up these power plants are also part of the problem mix.”

“On top of this, part of our current supply comes from plants running beyond their maximum age—for instance, Agus 6 in Mindanao, which was originally designed to have only a 30-year lifespan, has now been running for more than twice as long,” he added.

Under earlier projections, the Energy Department estimated that the shortage would reach 300 megawatts, which would translate to 20 days of two-hour rotational blackouts in summer.

But Aquino said the power shortage could reach a worst-case scenario of up to 1,000 megawatts.

“We are keeping tabs on all the factors involved, and I am very much aware that government cannot be complacent in addressing these issues. After all, should there be a shortage, it is our people who will bear the brunt of the burden—and no amount of excuses or explanations will be able to temper the anger of the public,” the President said.

Energy Secretary Jericho Petilla, who recommended emergency powers for the President in July, said he hopes to start contracting the additional capacity by October.

Petilla said government is looking at the additional capacity from Avion 2 (100 MW), Millennium Navotas plant (100 MW), Limay (36 MW) and the ILP participants (71 MW) to provide a total of 300 MW.

That would leave 300 MW more needed for reserves.

Petilla said that government is expected to spend about $20 million per 100 MW of leased capacity per year. He said funding can come from the government royalties from the Malampaya gas field or from the universal charge.

“There is a crisis. There are some people that are saying we can live with that. What I’m saying is it’s a deficiency,” Petilla said.

The energy chief said government will set the criteria for contracting the additional capacity, including reliability, shortest term and least cost of supply.

At the House of Representatives, Belmonte   said a shortage in 2015 should be averted now, but Congress must still review the bases for the President’s request.

“We have to know why, what is the new development that made him change his mind, what he hopes to achieve with these powers,” Belmonte said.

House Majority Leader and Mandaluyong Rep. Neptali Gonzales, Jr. said that Congress is ready to review any request from the Palace if it would able help address problems in the energy sector.

But Abakada party-list Rep. Jonathan dela Cruz, a member of the independent minority bloc in the House, said the President must lay the basis for asking Congress for the authority to contract additional generating capacity.

“Malacanang has to justify why and how we came to this pass after the private sector has had its way with our power sector and after we passed on all kinds of obligations to our consumers and the government,” he said, noting that the Philippines had the highest electricity rates in Southeast Asia.

Isabela Rep. Rodolfo Albano III, an opposition congressman, said the Energy Department could explore other options before asking President Aquino to seek emergency powers.

This could include scheduling and coordinating plant maintenance shutdowns, he said.

ACT Teachers Rep. Antonio Tinio and Bayan Muna Rep. Neri Colmenares said President Aquino should not be given emergency powers.

“I don’t think a President who has committed unconstitutional acts, publicly criticized the Supreme Court for doing its job, and expressed his desire to stay on in Malacañang beyond 2016 can be trusted with emergency powers. Congress must find another way to solve the power crisis,” Tinio said.

Colmenares, a House deputy minority leader, said the emergency powers would mean sweetheart deals, corruption, take-or-pay contracts, and high electricity rates.

“Apologists of President Aquino should not split hairs on this issue and call a spade a spade. The President asked for emergency powers [just like President Fidel Ramos did]... and the essence of this power is to ask Congress for authority to enter into negotiated contracts for additional generating capacity. But up till now the Department of Energy has not sufficiently laid out the reason for emergency powers because as their own data show there is enough power supply,” Colmenares said.

Based on DOE figures as of 2013, the installed capacity for Luzon grid is: 12,790 MW and dependable capacity is 11,469MW. The peak demand for the grid is 8,700 MW, with Meralco accounting for 6,121 MW, he said.

“Deducting dependable capacity from peak demand, there should have been allowance for reserves amounting to 2,700MW. This is more than the 400 MW deficit that Secretary Petilla claims. Based on the DOE figures, even in a tight supply condition, there should be more than enough supply,” Colmenares said.

“Now, even if there would be a shortfall of electricity the government can still tap state-owned power plants like the Malaya power plant and the Sucat power plant. These power plants should be immediately rehabilitated and recommissioned instead of being sold to the private sector,” he added.

Anakpawis Rep. Fernando Hicap pointed out that based on the Energy Department’s own data, installed and dependable capacities of the Luzon grid have constantly increased in the past two years.

“There was no single mention of power crisis or power shortage in the government’s Philippine Energy Plan 2012-2030,” Hicap said.

“For 2014 to 2015, the DOE has targeted 27 indicative power generation projects with a total capacity of 2,795-megawatts. Where is this coming from? Why the mad rush for emergency powers?” Hicap said.

“Since 2010, when Aquino assumed the presidency, the public had been warned about a looming power crisis. But the actual threat stems from the government’s existing policies in the power industry, which relies heavily on the private sector for the generation, transmission and distribution of power supply,” Hicap said.

“We are one with the Filipino people in opposing emergency powers because it would make life harder for everyone due to power rate hikes,” Colmenares said.

Instead of asking for emergency powers, Hicap said, the government should repeal the Electric Power Industry Reform Act that has led to unreliable and expensive electricity supply.

“Emergency powers for Aquino would only mean more expensive electricity rates for consumers and more profits for businesses in the power industry,” Hicap said.

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