Energy Secretary Alfonso Cusi told Congress Thursday the government should be allowed to generate electricity from a nuclear power plant to augment the country’s supply of power.
Testifying before the Senate committee on energy, Cusi also asked for the authority to sanction power industry stakeholders.
“[W]e… would like to ask this honorable committee under the leadership of its chairman, Senator Sherwin Gatchalian to, among others, look into the following: allowing government to engage in limited power generation, not to compete with private companies but rather to augment the energy supply requirements when needed,” Cusi said during Thursday’s Senate hearing on the power supply shortage.
The Electric Power Industry Reform Act of 2001 (EPIRA), which paved the way for the privatization of the power generation and transmission sectors, prevents the government from engaging in power generation.
But Cusi said government power plants are best for the reserve capacity of the grid as they will be outside the competition in the electricity market.
Cusi said such power plants can be from nuclear energy “subject to technical and safety factors.”
“Nuclear energy is being used by other countries in Asia and given the advances in technology the risks involved can now be better managed,” he said.
He also urged the Senate to grant DOE the authority to sanction power industry players.
“Allowing the DOE authority to issue measures to protect the consuming public during a state of emergency, such as, moratoriums on disconnection, grace period on payments, [and] allowing installment payments,” Cusi said.
He also asked the Senate to amend the franchise of the grid operator National Grid Corp. of the Philippines and for DOE to take back the responsibility of preparing the Transmission Development Plan to integrate planning of transmission and generation expansion plans.
Cusi said he wants to revert to the government the system control of the grid for management of ancillary services as well as national cyber security.
Cusi said the brownouts on May 31 and June 1 were due to the forced outage of power plants with a capacity around 2,000 MW each day.
“The ultimate cause of the rotational brownouts was the fact that several big power plants went on forced or unplanned outages...That is the ultimate cause,” he said.
Cusi said the agency is already investigating these power plants and has asked the assistance of the Department of Justice, the Philippine Competition Commission, and the Energy Regulatory Commission to determine if there was collusion.
“If found to be so, proper charges shall be filed against those who are responsible,” he said.
He said other contributory causes include the volume of derated capacity, which includes coal, hydropower and wind farms, which reached a total of more than 4,200 megawatts.
These derated power plants further dwindled the available supply in Luzon.
“Per our initial analysis of available data, however, we saw some abnormalities and so we issued corresponding letters demanding explanations from these power generation companies,” Cusi said.
He said that under the Must Offer Rule, all power generation companies are mandated to make available their maximum generating capacity to prevent capacity withholding by the power plants.
“If we determine that indeed there was a violation committed by these power plants, we shall strongly proceed against them as provided by law. Moreover, the lack of adequate contracted reserves further aggravated the situation,” he said.
Senator Aquilino Pimentel III asked Cusi if his remarks meant that EPIRA was not working.
“Is this now an admission that EPIRA is not working or is not working to our liking? What are the current deficiencies that will be solved by amending the approach and allowing the government or the state to produce power?” Pimentel asked Cusi.
Cusi said EPIRA was able to address the problem at the time it was created.
“But times have changed and there are things that have developed that need to be addressed,” he said.
“What I’m saying is that there is no harm if we take a look and study the proposal for us to have a system that would be really working and serving the interest of the public,” Cusi added.
Committee chairman Senator Sherwin Gatchalian said the brownouts affected close to 705,000 customers of the Manila Electric Company, equating to about P116 million in economic losses.
Senator Risa Hontiveros aired her concern over the employees who are currently working at home, students on online classes and most importantly, the vaccine rollout program.
“I am very worried about the situation because less than a year from now, we will have our national and local elections,” she said.
“Elections are automated throughout the country, that is why we cannot afford to have power outages even in one town or city,” said Hontiveros.
She also mentioned that studies showed that the Philippines has the highest power rates in the Association of Southeast Asian Nations (ASEAN) region.
She pegged the country’s electricity rate at $24.83 per kilowatt hour as compared to the $13.49 per kilowatt hour of its ASEAN neighbors.
The senator also questioned the government’s power supply programs and the Department of Energy’s assurance of adequate power supply during the 2021 budget hearing.
Meanwhile, grid operator NGCP asked the ERC to intervene to prevent price spikes if the DOE requires it to contract 100 percent of its ancillary services (AS) from firm contracts.
NGCP said in a statement Thursday consumers stand to suffer from soaring electricity rates should the DOE’s proposed strategy of contracting firm AS prevail.
“Because of the staggering increase consumers may face in their next power bill if NGCP will be forced to do this, we are hoping that the Energy Regulatory Commission (ERC) should be, at the very least, consulted and given the opportunity to review the policy and study its full impact on the consumers,” NGCP said.
NGCP said DOE is insisting on the dispatch of ancillary services as a response to thin operating margins and possible load dropping in the Luzon grid at various points this year due to multiple power plants on extended outage.
“NGCP has constantly been bullied not just over the past couple of days, but in the past years – being used as the scapegoat; the easy target to blame for the issue. We were blamed for not contracting enough AS, as if it is the solution to the problem,” NGCP president Anthony Almeda said during yesterday’s Senate hearing.
“To put it on record, NGCP has 100 percent contracted a healthy mix of firm and non-firm AS contracts. We have been called out for not contracting 10 percent, but should we follow this directive, there will be an astronomical spike in electricity prices for consumers,” Almeda said.
He said firm contracts are paid whether or not the power is used.
“All of us here are consumers....NGCP cannot, in good conscience, let consumers bear the brunt of paying for ancillary services that are neither used nor needed,” Almeda said.
NGCP said it is not denying its obligation to secure sufficient AS.
“This obligation is clear. We only ask that this be thoroughly studied, and the price impact be given primary consideration. With consumers already reeling from the economic effects of the pandemic, industry leaders should think before pushing a procurement strategy that can be, at best, described as anti-poor, and at worst, basis for charges of plunder,” the company said.
The grid operator called on the long-term solution of installing new baseload power plants to meet burgeoning demand.