Making decisive moves

Can the administration of President Rodrigo Duterte summon its much-vaunted political will and take maverick steps to address the country’s power woes? There are very good indications it will and they can. This should be good news for us residential consumers, including industrial power users.

Department of Energy (DOE) Secretary Alfonso Cusi Jr. publicly declared the Duterte administration is open to reviving the country’s nuclear energy program. Speaking before the International Nuclear Conference that was held last week here in our country, Cusi made it clear nuclear energy is “a viable choice” for the Philippines still struggling to meet its power supply demand.

Cusi cited reliability, cost efficiency, safety and low emission as the primary reasons for the present government’s open mind attitude toward this much-vilified power generation technology.

If Cusi seriously pursues this path with similar resolve that this administration has been pursuing its war against illegal drugs and corruption, we might see the Philippines joining some 31 other countries that host close to 450 nuclear power plants. Most of these are in developed regions like Europe and North America with the United States and France generating the most megawatts of electricity using this technology.

Cusi’s challenge will be to prove that it would really be safe and that the country would not experience the same horror that the people of Fukushima in Japan went through.

Appearing at a public hearing of the Senate committee on energy later last week, the DOE Secretary conceded that the option of using the mothballed 600-megawatt Bataan nuclear power plant (BNPP) will remain a challenge to get the public to accept and support this option.

“If I will make a decision, I will go, I will open it. But it’s not for me to decide. It’s for the country to decide,” Cusi told the Senators.

Although it remains mothballed since 1986, the government has been spending around P27 million a year just for the maintenance of the BNPP, Cusi informed the Senate.

Looking at new and cheaper technologies should help boost business sector confidence that this administration seriously wants to address power sector woes.

This follows the recent pronouncement by Cusi that he will look seriously into tapping the Malampaya funds to pay off a huge part of the stranded costs passed on to power consumers. If the funds are used here, a major burden will be taken off from the shoulders of ordinary Filipino electricity consumers.

This could be a big step in making sure that President Duterte’s promise to lower the cost of electricity in the country will happen during his administration.

The plan to tap the Malampaya funds for this purpose has been met by some legal objections. Legalists say that to be able to do that, amendments in some present laws will have to be done.

Energy Regulatory Commission (ERC) Chairman Jose Vicente Salazar has publicly expressed support to Cusi’s move. Salazar was quoted saying the plan can be legally justified. Salazar once headed the Integrated Bar of the Philippines (IBP) as national president.

It may be safe to presume that Cusi’s move will not be deprived of solid backing by the legal community with no less than the ERC chief’s expressing his support. In fact, Salazar is at the forefront to summon public support for Cusi’s position on this issue.

Salazar himself appears decisive in pushing reforms within the power sector. As I mentioned in my previous column, the ERC has notably been pushing two important measures – the Competitive Supply Procurement (CSP) and the Retail Competition and Open Access (RCOA) policy.

Through the CSP, the ERC requires distribution utilities to bid out their power supply requirements. This compels power generators to come up with competitive offers in a transparent process.

If this proves successful, even distributors which are partly or wholly owned by the same conglomerates that run the power generation business will be forced to go for the cheaper offer.

Ordinary Filipino consumers will then have to pay less for cheaper power supply to their homes and businesses.

RCOA, meanwhile, is supposed to make the so-called “captive markets” smaller and the “free market” bigger. The “free market” consists of business enterprises which have large enough requirements to be allowed to look for their own power supplier.

We heard that Salazar could be facing stiff opposition from industry players. Already, suits have been filed against the ERC in a bid to stop the agency from carrying out the reforms.

By the looks of it, however, the reforms are inevitable. Many countries are now looking at transforming their respective power industries into one where competition is present, even if just on a limited scale.

The US Federal Energy Regulatory Commission (FERC), for instance, has been taking steps to inject competition in the power sector since the 1980s. During that era, the FERC made bold moves to introduce competitive bidding among independent power producers, a step which triggered speculation that the US was eyeing the deregulation of that sector.

Closer to home, India, which has one of the world’s biggest power customer base, has set firm goals to liberalize its power sector since the early 2000s. Its lawmakers and its Central Energy Regulatory Commission clearly stood for the development of a “competitive market” in that sector.

Salazar’s moves are, therefore, not without any precedent. Unfortunately, we are not updated as to how the US and India fared since they initiated moves to make their respective power sectors competitive. Regardless, the ERC appears to be in the right direction.

There are talks that ERC’s push for competition could dampen investor enthusiasm. This could be without solid basis. As things stand today, the country’s biggest investor groups are already in the power sector, investing heavily, and introducing innovations that are good for customers.

If Salazar can rally support for Cusi’s initiatives, there is no reason why he would not be able to muster backing for the industry changes the ERC wants to put in place. Only decisive moves can bring stability in the power supply amid the resurgence of crippling blackouts in our country.