It is not summer—when demand for electricity is usually at its peak—but the series of yellow alerts raised in Luzon shows just how vulnerable the country’s energy supply is, a situation that government agencies should act on, and quickly.
It is little wonder then how, weeks after the House of Representatives approved a symbolic P1,000 budget for the embattled Energy Regulatory Commission (ERC), House Minority Leader and Quezon representative Danilo Suarez asked the agency to keep up the pace in its approval of a P102-billion plant that can add a crucial 1,000 megawatts (MW) into the grid.
Time, as Suarez perhaps knows too well, is of the essence when it comes to a complex, critical, and investment-heavy industry like power. The application of this coal-fired power plant in Atimonan, Quezon, was filed in 2012. Five years later and it remains under evaluation by ERC.
Suarez made the statement during a House energy committee hearing, which also echoed the town residents’ calls, adding that the power plant will create jobs and thus much-needed development in the first-class municipality.
Suarez added: “Remember the dark days when we had to buy and commission gas-powered barges? It is crucial for the energy body to give the green light to applicants that complied with the regulatory requirements the authority to construct their power plants.”
The country’s power supply had long been plagued by insufficient base load and thinning power reserves, which the six yellow alerts—when reserve power falls below the required level—should bring into fore.
More importantly, the yellow alerts should serve as dire warning for all electric consumers. From experience, power shortages—especially at a traditionally off-peak time of the year—had been followed by a sharp spike in rates from power generation companies, and brownouts had been not just inconvenient—with many aspects of peoples’ lives today run by gadgets—becomes more expensive when forced to fire up fuel powered generators.
This is only on the consumer side. On a macro level, the Philippine economy can ill afford any disruption in its power situation. An energy crisis will be no less than disastrous for all industries, triggering a domino effect that will undermine the country’s competitiveness and unprecedented growth.
As it is, Foreign Direct Investments are already at a nose dive and the government has had to fend off one political scandal after another. The failure of ERC to act fast in approving pending power supply agreements can potentially aggravate this already dire situation and even lead to economic instability.
In the same hearing, for instance, Committee on Energy Chairperson Rep. Lord Velasco from the lone district of Marinduque cited the 4.9-percent growth in energy demand, which is equivalent to some 600 MW of additional capacity per year. In fact, while over 1,000 MW of power output was added last year, the rise in demand has effectively soaked it up.
To make matters worse, a fifth of the country’s power plants today, he said, are more than 30 years old and thus are increasingly less reliable and dependable. True enough, the yellow alerts were partly attributed to unexpected shutdowns of some plants.
“We cannot keep delaying these projects as we need stability of energy supply,” he said. “If there are shutdowns by these old plants, that will mean a spike in prices. We need to stop pointing fingers and putting malice, and already start these new projects.”
He must have been alluding, at least in part, to allegations of so-called “midnight deals” raised by Bayan Muna representative Carlos Zarate between ERC and Meralco, which supposedly benefited from the extension of the competitive selection process for new supply contracts from November 2015 to April 2016.
ERC Commissioner Alfredo J. Non had explained elsewhere that the extended deadline had not been intended for parties to negotiate and sign new supply contracts but only for the filing of the contracts already signed on or before the original deadline.
For its part, Meralco had told the committee that more than 90 applications had been filed by other distribution utilities and electric cooperatives during the extension.
“Our assurance when we conduct and contract these power supply agreements [is] we always ensure that we follow our mandate to get the least-cost power for our consumers,” said William Pamintuan, Head of Legal & Corporate Governance for Meralco.
Being a non-nuclear country, we need to depend on coal and expensive diesel power plants to reliably supply the fast-growing demand for electricity. The government’s promotion of renewable energy and its ‘green’ appeal is still very expensive and unreliable. We need to build these power plants now and ERC must step up and start approving long delayed Power Supply Agreements.