Electric woes

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By Neil Honeyman

An Independent View

Monday, September 1, 2014


A MISSION statement, the formal summary of the aims and values of an organization, is helpful in understanding what that organization wants to achieve.

The Department of Energy (DOE) mission statement says: “We at the Department of Energy in partnership with our stakeholders, shall
improve the quality of life of the Filipino by formulating and implementing policies and programs to ensure sustainable, safe, secure, sufficient, accessible, and reasonably-priced electricity. In pursuit of this mission, we commit to render efficient service with utmost integrity and professionalism.”

Energy Secretary Petilla warns us that there will be an electricity shortage in 2015 and that we should be prepared for eight-hour brownouts.

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He has also made representations to President Aquino to use emergency powers to obviate the impending shortage. We see a gulf between Petilla’s recent pronouncements and DOE’s mission statement.

Why is there an impending shortage?

There is no answer to this which does not reflect adversely on DOE’s inability to live up to its own mission statement.

We have many organizations which are willing and able to generate electricity. The amount of electricity required over the next year or so can be, and is, forecasted accurately by the National Grid Corporation of the Philippines (NGCP). The market place is prepared to pay for the electricity it receives.

So what’s wrong?

DOE is responsible for an excessive amount of red tape which hinders electricity generating projects. New power stations are not being built when they are already desperately needed.

It may also be that renewable energy projects are not being implemented as quickly as had been hoped. Again, it is administrative inertia on the part of government instrumentalities which is at least partially to blame. The Renewable Energy Act (RA 9513) was passed in 2008 but it was only in 2012 that the subsidies (aka ‘feed-in tariffs’) mentioned qualitatively in the Act were quantified and approved by the Energy Regulatory Commission (ERC). These subsidies, given a full take-up of the quotas mentioned by ERC, will cost the electricity consumer well over P30 billion per annum.

Petilla has sought ERC approval to increase the quota for solar energy from 50 MW (agreed in 2012) to 500MW. The subsidy for the additional 450 MW has been proposed by the National Renewable Energy Board to be P9.10 per kilowatt hour (KWH). If the additional quota is fully used, then this will cost the consumer P35.97 billion per annum. This is in addition to the over P30 billion subsidy agreed in 2012. [Megawatt=MW]

We have made a short submission to the ERC to the effect that the 2012 subsidies is quite enough support for the renewable energy industry. An additional P35.97 billion is an unfair burden to the consumer. ERC is due to hold a public meeting at its head office tomorrow to gain further inputs as to the reasonableness or otherwise of DOE’s proposal. We hope that ERC decides that no further renewable energy subsidies are necessary.

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Furthermore, we need Congress to draft and pass legislation which curtails the power of DOE to cause viable electricity generation projects not to be implemented timeously.

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Central Negros Electric Cooperative (Ceneco) plans a 15-year contract with Energreen Power Development and Management Inc. The electricity is obtained from diesel and the contracted price is 12.44 per Kwh. Since the current generation charge appearing in our bills is 5.6509 per Kwh, the additional P7 (+VAT) is substantial. The contract will be filed with ERC which will hold a mandatory public consultation.

Due to government incompetence electricity supply is problematical. Unless drastic measures are taken quickly, electricity shortage will dampen economic growth.

Petilla should resign.

Published in the Sun.Star Bacolod newspaper on September 01, 2014.

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