Stop the blame game

"The sector’s development framework needs an overhaul."

 

Somebody should tell the government agencies and private companies in the energy sector to stop the blame game and step up to resolve the recurring power shortfalls across the board. 

It has been more than three decades since the government ceded its strategic presence in the sector to private entities on the promise that the country's power needs will be adequately served in as affordable and accessible manner as possible. 

That has not happened at all. 

Instead, we have the most expensive power rate in ASEAN and an essentially problematic sector getting worse by the day. It was not supposed to be the case when the Cory government took over in 1986. Up to now, no cogent reason has been advanced justifying that administration's move to dismantle the development and regulatory framework governing the sector. In one of its first moves after taking over, the Cory government abolished the then Ministry of Energy, set aside the government's power sector development roadmap and signalled that henceforth the private sector dictate the pace and expanse of our power requirements  Not content with that, it mothballed the 660MW Bataan Nuclear Power Plant (BNPP) which was supposed to be a key baseload facility without even bothering to consider a replacement. To top it all, again for no cogent reason, it put the screws on the existing government run generating and distribution facilities which was the bulk of those in place leading to long hours of brownouts, even blackouts, earning then President Cory Aquino the moniker "Queen of Darkness." 

To think that despite allegations of corruption and mismanagement, the government-run NAPOCOR and its subsidiaries were considered by most observers, including the visiting French Energy Minister at that time, as one of the best run operations in the power sector worldwide. 

The best proof that indeed the government-run power sector operations were indeed up to world standards was the fact that most of those who eventually manned the private power companies after the rushed privatization efforts under the Cory and Ramos administrations simply got rehired to run the facilities. That was, of course, no surprise at all since most of the running power plants up to the short lived Estrada administration were government owned which were merely leased or sold at bargain prices to selected private sector players. Whew!!!

That highly problematic situation was further cemented with the passage of the EPIRA Law in 2001. Originally proposed to correct the power sector’s highly problematic development and regulatory framework, the law only served to exacerbate the situation. The ongoing Senate inquiry on the sudden rotating brownouts in Luzon highlighted the reasons for such an dubious and condemnable occurrence. 

Energy Secretary Al Cusi has laid the blame squarely on the National Grid Corporation of the Philippines, the private sector power transmission and distribution concessionaire which is 40 percent owned by the Grid Corporation of China. Being the gatekeeper for the allocation and dispatch of power by the private sector producers (the last government-run facility remains in limbo unable to produce even one megawatt of power), Cusi emphasized that NGCP had the principal responsibility to ensure adequate power supply and distribution.

It is the duty of NGCP, Cusi said, to provide security and efficient delivery of power supply. He added that it is not true that power supply is inadequate and very thin, noting that the installed power capacity in Luzon is 17000 MW against a peak power demand of only 11000MW.

Said Cusi: "Based on its concession contract, NGCP is supposed to: a) complete construction of transmission lines to allow power plants to connect to the national grid; b) contract generation companies (GenCos) to build power plant; c) sign forward contracting to enable existing plants to connect to the national grid and augment supply and d) schedule preventive maintenance to ensure reliable energy supply specially during the peak summer months of April to June. "

Cusi's pointed advice could have ended the blame game right there and then. The problem was in the same hearing Mario Marasigan, Director of the DoE Electric Power Industry Management Bureau tended to contradict his boss’ assertions. Marasigan confirmed that based on their latest Luzon power outlook study, capacity reserves or available supply would be critically thin in the fourth week of June, third week of July and first week of August thus red alerts for the Luzon grid should be expected within these periods. So, which is which?  

Of course, Marasigan somewhat cushioned the impact of his "study"on his boss' statements by confirming that two of the power plants providing at least 478MW were on forced shutdowns and that part of the Ilijan natural gas complex and the Pagbilao coal fired power plant would be out of service for sometime. Nonetheless, his statements only served to highlight the reality of the precarious situation of the power supply in the Luzon grid. Marasigan's point was reiterated by NGCP itself as the grid operator noted that it cannot simply forward contract power supplies without a rate change which, get this, needed approval by the Energy Regulatory Commission (ERC), the power sector's auditing and regulatory body. 

So the question remains: Why indeed don't we have more power plants in place to ensure that all these problems of the existing ones conking out or the unwarranted topsy turvy maintenance schedules do not recur? For that matter, why are we not calling out the NGCP for the continued non-construction of much needed transmission lines and ancillary services, to name just two of the additional "reasons" proferred as problems, taken off the table?   

Whether this aberration is solely NGCP's fault as Secretary Cusi asserts or a combination of a thinning reserve situation, NGCP's negligence and related cases such as the ponderous approval processes of the ERC, has yet to be sorted out. Suffice it to say that the power sector's development regulatory framework needs overhauling starting with the various laws, regulations and orders in place governing the operations of this critical sector. The sooner, the better.