State of Power Industry or Do WE Have Enough Supply?

David Celestra Tan, MSK
25 March 2018

There is a high profile and obviously high budget media campaign going on to condition the people’s minds that the country needs more and newer power plants. This is amidst the stall in the approval of Meralco’s 3,551mw of coal plants that they negotiated with five (5) companies all controlled by sister Meralco PowerGen or MGen under the midnight loophole created by the ERC In March 2016.

(The inexplicable postponement of the CSP policy by the ERC caused the suspension of the five ERC Commissioners for unduly favoring Meralco and betrayal of public trust. There is now a tug of war in the judicial system over the suspension)

A few months ago CNN Philippines ran a special on the power industry titled “Do we have enough power supply”? We have no argument against the need for more supply and the need to build new ones to meet the country’s growing energy needs.

Just today I chanced upon a  broadcast again on CNN about the “State of the Power Industry”, anchored by Ms. Pia Hontiveros. Featured panelists were Mr. Rogelio Singson, new President of Meralco PowerGen, Sen. Win Gatchalian, Chairman of Senate Energy Committee, Ms. Mylene Capongcol of the DOE, and Atty. Victor Dimagiba of an organization called “Laban Konsyumer”.

Mr. Singson went to great lengths to point out that the country needs newer power plants. That 33% of the country’s power plants are 25 years and older. That the DOE is requiring that the country raise its reserve capacity from the current 15% to 30%. That the country needs dependable and cost efficient base load supply which is coal.

The young and eloquent Sen. Win Gatchalian chimed in that there is too much redtape in getting projects approved and that it takes up to seven (7) years to get a plant to operation. He said there is a bill to legislate the one-stop processing of these approvals so plants can be built within four to five years. It was great to hear the prodigious Senator enunciate that the country needs a balanced approach to power supply and must consider assurance of supply, lower cost of power, and cleaner energy. He pointed out the need for the country to have true competition so everyone can compete.

When Mr. Singson had the chance, he could not help himself but to plug for the approval of the 1,200mw “super critical” power project in Atimonan.  He mentioned about the 455mw expansion in Mauban is almost complete but that the 600mw Peninsula power project had taken more than 10 years to get the approvals. He even mentioned that the high cost of power in the country have driven industries to go to other countries.

DOE Veteran Ms. Mylene Capongcol and new consumer advocate Atty. VicDimagiba spoke about their take on the state of the power industry.

In general we have no argument about most of what was said. Our problem is in what was not said  in the state of true competition in the power generation sector, its cartelization by Meralco,  the adverse impact on the Filipino consumers and the industrial competitiveness of the country.  There cannot be a fair discussion of the State of the Power Industry without addressing these anomalies.

It seemed the CNN specials were designed to hammer into the minds of the people that we need additional and newer coal power plants so that when the seven (7) midnight contracts of MGen and Meralco, and the effective cartelization of power generation, are magically approved despite the deviant process, that the people will not resist and even say thank you.

That’s exactly the problem. We are only being told that we need additional power plants. But there is no argument there. The issue is the process and the lack of consumer protection in the process of contracting those power plants. In ERC’s case, the fact that they apparently facilitated the circumvention of the CSP rules and the consequent denial of competitive power to the consumers.

Do you know that the costs of those expensive media campaigns ironically are paid for by the Meralco consumers through the operating budget approved by the ERC?  Life isn’t fair is it?

State of the Power Industry or Do we have enough supply? What was the real point for the consumers?

 

MatuwidnaSingilsaKuryente Consumer Alliance Inc.
matuwid.org
david.mskorg@yahoo.com

WIN WIN SOLUTION FOR MERALCO’s 3,551MW MIDNIGHT CSP CIRCUMVENTION

David Celestra Tan, MSK
11 March 2018

Things are eerily quiet on Meralco’s Midnight power supply contracts and one wonders whether we will be surprised one day soon that the seven (7) midnight contracts totaling 3,551mw of coal projects have been approved by the government and rammed through the throats of the 25 million Meralco consumers.

Another scenario is the power crisis gambit is in play that had worked many times before for the special interest groups in forcing the approval of coveted power projects and prices. There will be a strategic quiet and letting the country teeter into power shortages. Interrupt power and punish the captive market of residential and commercial establishments and make them beg for “electricity at any cost, damn with the rules and legalities”.

This can happen and will happen because most of the power generating plants in the country are controlled by the same groups that allied with Meralco in the caper of April 26, 2016. Let us remember that these are the same groups who were found engaging in power market manipulations in November and December 2013 and supposedly meted hundreds of millions in fines.  Except the final report has been frozen in the ERC.

I think the energy family led by the DOE should work for a win-win solution and not wait until there is already a power crisis. We vehemently object to the circumvention of the CSP policy but we also vehemently object to allowing a power shortage.  Both ways the consumers get screwed. We cannot allow power development of the country to be stymied by these Meralco transgressions.

And there are many pro-active options.

1. The DOE can push for CSP biddings now for the desired capacity additions by 2021. This can be in the range of 1,000 to 1,500mw total. LNG and Coal. Meralco and the other DU’s can be the committed off-takers assuming they are sincere in bringing least cost power to the consumers.

These biddings will probably settle once and for all the debate on what is good for the consumers, an “aggressive negotiation” of Meralco with its sister company Meralco PowerGen or the true competitive bidding administered by a third party”?

These true biddings can also test in the market a more consumer friendly Power Supply Contract template that mitigates sweetheart provisions on fuel allowances, downtime allowances, and minimum off-take guarantees.  We now have to distinguish the contract terms for BOO and BOT. Pay only for delivered service and no payment for downtimes.

Most importantly this bidding will usher in for the country the long needed era of truly competitive biddings for power supply and the opening of the generation sector to all deserving and “good for the consumers and environment” generators.

2. The DOE can also initiate a win-win solution for Meralco’s 3,551mw of midnight contracts. Perhaps a fair formula can be worked out so that about half of the 3,551mw capacity (1,750mw)  can be moved forward in a way that is fair for the consumers and the others are dropped and the proponents just participate in biddings. Also only 50% of this 1,750mw can be controlled by MeralcoPowerGen.

How about holding a run-off auction administered by a proven 3^rd Party among the seven (7) contracts where they submit a more competitive bid with commercial operation of 2020 to 2022. The lowest 1,750mw get to move forward.

This is a one time compromise solution and must be considered as an exception and not the rule or precedent.

It is eerie when the Department of Energy that has the mandate to assure sufficient power supply for the future, is quiet about the subject. Let us hope the consumers and country are not hit by a power crisis hysteria again in a few months, perhaps as early as April and May when it is hot and the power needs of the country soars to the highest peak.

Is a Meralco “all or nothing” gambit in play? Will the consumers again be threatened and tortured with power shortages and be made to swallow Meralco’s 20 year sweetheart deals?

Why are we not seeing some affirmative action now? It is not too late for a win-win solution.

 

MatuwidnaSingilsaKuryente Consumer Alliance Inc.
matuwid.org
david.mskorg@yahoo.com