“This issue was sparked by a convergence of events that started with the scheduled shut down of the Malampaya facility that drastically reduced supply to natural gas power plants powering approximately a third of Luzon’s electricity consumption“
The Supreme Court’s recent decision affirming the mandate of the Energy Regulatory Commission’s of Meralco’s request to implement a staggered collection of its rate adjustments for the month of November 2013 has been lauded by consumer groups for its cushioning impact amidst the raging high inflation now hitting hard on the economy.
Instead of an automatic pass on of generation charges allowed by existing rules, Meralco requested to spread out collection of the total P22.64 billion so as not to unduly burden its customers. A move that is sympathetic to the times.
Consumer advocacy group CitizenWatch Philippines in its posted statement said, “The High Court’s decision provides a measure of stability in the power industry while being mindful of the concerns of the power-consuming public and the proposal of Meralco to defer and stagger the payments is responsive to the ongoing economic difficulties of Filipino consumers.”
The group further points out “the lack of a stable source of power supply was a problem in 2013 and continues to be a problem to this day.”
This issue was sparked by a convergence of events that started with the scheduled shut down of the Malampaya facility that drastically reduced supply to natural gas power plants powering approximately a third of Luzon’s electricity consumption. This was further worsened by unplanned outages of various generation plants that simultaneously shut down due to break downs of aging equipment.
Allegations of so called “collusion” to jack up spot market prices created a conspiracy theory that seemed believable at first but if you think of it, with a little logic, really does not make sense. A power plant shutting down will not benefit from jacked up spot market prices because they are off the grid and have no power to sell. When power supply is low and demand is high, it’s the operating power plants that will be sought after and therefore benefit from any windfall.
For power plants that had to shut down, it was a big loss of opportunity.
Though without clear basis, the circumstantial accusations painted a negative image of power generators and created some distrust because the public really has no understanding of the complex and highly regulated environment of the energy sector.
There is no appreciation of the huge investments, the gauntlet of regulatory permits, the years it takes to build a power plant, and the engineering and human resource challenge of building and operating an end-to-end power infrastructure so that when we flick the switch, the lights go on.
According to the SC decision, “Without question, the ERC acted within the confines of its regulatory powers and cannot therefore be said to have acted with grave abuse and discretion”—thereby rejecting the charge filed by the petitioners.
The decision support’s the regulator’s actions as consistent to its mandate under the Electric Power Industry Reforms Act (EPIRA). Beyond ERC’s vindication, this sends a positive message on the stability of the power industry and will boost investor confidence to engage in building base load power plants we urgently need to keep up with the pace of consumer demand.
Now that there is closure on this case, regulators and the energy industry should train their focus on synergies that will result on a sustainable electricity supply surplus instead of coping with the cyclical thinning of power reserves.
Just recently, the National Grid Corporation of the Philippines raised two Yellow Alerts because of the forced outage of 4 power plants and 1 plant with derated output resulting in a total of 1,274 Megawatts (MW) power supply loss.
A Yellow Alert is raised when the total reserves are less than the capacity of the largest power plant in operation which during this alert was only 236 MW. If more plants would shut down this would raise a Red Alert and will require rotating brownouts.
Disruptions in electricity services at this time when all are heavily reliant on digital services to go about daily transactions will further aggravate the precarious situations of many businesses still struggling in survival mode. Aside from the great inconvenience of power outages, just imagine how you will be affected when you can’t power up your digital devices to get online.
For enterprises of any size, power disruptions are showstoppers that are costly. For investors, unstable and expensive power are red flags that will shift their interests to countries with more attractive environments.
The economic aspirations of a robust economic upturn that will create quality jobs and a new era of growth pledged by President Ferdinand Marcos Jr. will be paced by the power capacity of the energy sector. This will need an experienced and well-qualified Energy Secretary that can muster the government and the power players to align on a sustainable strategy to close the power supply gap and lower the cost of electricity.