Green energy okay, but not at this cost

GOTCHA - Jarius Bondoc () - July 11, 2011 - 12:00am

We all want renewable energy, of course. With supply infinite and non-pollutive, it is the smart alternative to dwindling dirty sources like diesel and coal. But should we go into solar and wind if it would swell our electricity bills? Certainly not. More so, if that extra cost amounts to P8 billion a year, for 18 years, or a total of P144 billion.

The P8 billion yearly is what the government wants consumers to subsidize for R&D of solar-wind technologies. The National Renewable Energy Board is petitioning the Energy Regulatory Commission to insert it in electricity bills, as suggested in a new law. If the ERC consents, consumers will fork up an additional 12 centavos per kilowatt-hour of electricity. Philippine electricity notoriously is the costliest in Asia, a dampener to investments and dread of households.

The government would grant P17 per kilowatt-hour for solar R&D, and P10 for wind, for close to two decades. This will multiply electricity production costs six times. Romeo Bernardo, former undersecretary of finance asks if it’s still affordable. Conventional sources cost only P5 a kilowatt-hour to produce, on average.

The Foundation for Economic Freedom is sounding the alarm against the rent-seeking subsidy. The money will go to “rich solar and wind producers, at the expense of Philippine industry and the Filipino consumer,” the FEF says. The organization of economists posits that, if the Philippines must subsidize renewable R&D at all, it should be for biomass and run-of-the-rive hydro. These types would benefit rural areas more. By contrast, solar and wind are unsteady and unreliable because dependent on weather, according to FEF president Calixto Chikiamco.

The government views the subsidy as the Philippine contribution to reducing carbon emissions. But the FEF counters that the country’s emissions are less than one percent of the world’s, while 30 percent of its power already derive from renewable geothermal. So much for the rent seekers’ green cover.

The STAR columnist and FEF member Boo Chanco questioned recently the subsidy’s 18-year duration. Quoting a solar industry exec’s report to stockholders, he said their output would match grid parity in three to five years. So why lock consumers into a two-decade payout, instead of waiting only awhile for solar and wind to catch up.

Abroad solar and wind subsidies are also under fire. Boo cited market trader Jim Chanos’s debunking of the energy’s vaunted cost-efficiency. In a presentation entitled “Does Wind + Solar = Hot Air?” Chanos pointed up overblown figures, including supposed jobs generation.

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The private operator of the state’s power grid also is seeking a rate hike of 20-28 centavos per kilowatt-hour over the next five years. This is to recover P173 million in damages from Storms Ondoy and Pepeng, and the bombing of a transmission line in Mindanao, all in 2009.

Insurance normally should cover the indemnity that the National Grid Corp. of the Philippines is asking for. The Government Service Insurance System officially insures all of the state’s P2 trillion worth of property. It then awards the policies to private re-insurers, theoretically at an income to and protection for GSIS.

It turned out, however, that one big company bagged most of the GSIS reinsurance deals in 2008-2010. This included the power facilities operated by the NGCP.

Documents showed that the re-insurer won without bidding, only renegotiation. The GSIS at the time gave 12 competitors only 12 days to fill up three-inch-thick bid documents. When none were able to meet the deadline, the existing re-insurer prevailed through contract extension. In the resulting deal, the NGCP would only be able to claim damages if the losses hit $5 million, or P225 million at the time. That is why it is seeking to recover — via electricity rate increase — the P178-million cost of repairs from the storms and terrorist attacks.

The new GSIS board recently renegotiated anew, and got better terms. This means the previous board had conceded too much to the re-insurer, to the detriment not only of the NGCP but likely other agencies as well. This means the old GSIS directors must be made to answer for transactions grossly and manifestly disadvantageous to government interest.

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Last May 16’s Hotdog Reunion couldn’t be for one night only, as billed. Not with many fans missing the Pinoy pop-rock band’s show for frustrating reasons. Not after the event’s rave reviews. And certainly not with the many rekindled memories: like, the puppy love in “Pers Lab”, or the big crush who dumped you in “Beh Buti Nga”.

So there just has to be a “Hotdog Reunion Concert: The Repeat,” on July 26, 2011, starting with 7:30 p.m. dinner, at Dusit Thani Hotel ballroom, Makati City.

Featuring the Hotdog’s Manila sound hits, plus unrecorded songs like “You Make Me Blush (Parang Pulang Kamatis)”, “Sana’y Maganda Ako”, “Kulang”, and “Parang Robot”. With participation of the band’s female vocalists Nadia Moore and Elaine Evangeista, now Canadian residents.

For tickets to dinner, concert, and all-night dancing, call (02) 8866186, (0915) 3598228, or (0921) 2931784.

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Catch Sapol radio show, Saturdays, 8-10 a.m., DWIZ, (882-AM).

E-mail: jariusbondoc@workmail.com

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