Power shortage woes are back

It is not just the traffic gridlocks, poorly maintained mass transport systems, and illegal drugs problem that newly installed President Rodrigo Duterte has inherited from the past administrations. By now, it has dawned upon President Duterte that his predecessors at Malacanang Palace have also handed down to him major headaches in the electric power sector in our country.

The “red” alert of a major power supply shortage issued last Friday by the National Grid Corporation of the Philippines (NGCP) should be a cause of worry. This thin power supply situation continued the next day is a troubling indication to the Duterte administration, barely one month into office. 

Seriously? On a weekend when most industrial and business establishments were not using electricity, there was still thin power reserve? Leading many to ask, why there should be a power shortage at that time of the week?

The Luzon grid will be on yellow alert for the rest of the week, Department of Energy (DOE) Secretary Alfonso Cusi announced last Monday. But the power industry, Cusi reassured the public, has laid down mitigating measures to prevent blackouts or electricity interruptions amid shortage of power supply.

This, after Cusi met with the NGCP and top executives of the Manila Electric Co. (Meralco) and was briefed on the yellow alert situation for the next few days due to “insufficient power supply reportedly due to scheduled and forced outages of power plants.”

The projected available capacity is placed at 9,591 megawatts (MW) while peak demand was expected to reach 9,073 MW. A yellow alert status means that contingency reserves are below the minimum level set by the regulator but does not necessarily lead to power outages.

Pete Ilagan, official spokesman of the DOE, was quoted citing the report of the Philippine Statistics Office estimates of at least P3 billion worth of economic losses for each hour-long blackout. Based on this estimate, Ilagan calculated P10 billion as a “fair estimate” of last Friday’s blackouts involving 14 power plants that were off-line, resulting to a lost of 3,000-MW from the Luzon grid.

The inherited problem is not so much the shortage of power supply. Players in the power industry are apparently procrastinating the major changes that are forthcoming as announced by the new administration. This early it shows the tendency among these players in energy sector to resist reforms as mandated by law.

We understand that the Energy Regulatory Commission (ERC) is already looking into this. ERC Chairman Jose Vicente Salazar was reported as saying he is determined to probe these supposed shortages. Salazar vowed to find out if the power supply shortage situation was the result of technical setbacks and not merely being used as an excuse by unscrupulous parties who want to sell power at higher prices.

The ERC’s ongoing efforts at checking the behavior of big players in the power sector indicates what problem the new administration might be facing. The challenge is to make sure the reforms in the power sector mandated by law are fully implemented. The other challenge is to make sure powerful interests are not able to block these mandated reforms.

According to recent news reports, it appears there are two vital reforms being pushed by the ERC. One is the so-called Competitive Selection Process (CSP). The other one is Retail Competition and Open Access (RCOA). 

The CSP, based on media reports, directs distribution utilities to bid out their requirements for power among generators. This means no “sweet heart” deals with favored suppliers. They have to buy from selling firm or firms which comes up with best offers.

RCOA, meanwhile, is a system where customers – based on the size of their power requirements – are able to choose on their own from which distribution utility they would want to buy their supply from.

These reforms mean one thing: an end to the monopolistic tendencies among the giants in the power industry. 

The reforms have been intended to create genuine competition. Competition is good. It assures ordinary Filipinos of quality service and affordable pricing. It would make sure industry players are forced to outdo each other and to compete for customers’ patronage.

The talk is that it has not been smooth sailing for the ERC’s bid to put these reforms in place. 

While most of the industry players are reportedly willing to cooperate with the ERC, it looks like the agency is still up against major resistance on the part of some of them. It may be difficult to stop the reforms. While these are the mandates of the law, the obstructionists can still delay the inevitable.

Delays could mean making it hard for the new administration to make good on one important campaign promise – to make the price of electricity affordable for ordinary Filipino household electricity consumers.

This is why the power sector is worth looking into by the President. He has a major stake here, particularly in the success of the agencies tasked to implement the reforms.

Most likely than not, certain private sector participants in the industry would want to delay the reforms. 

Competition though is not something new here. In the power sector, competition is designed to bring about a system that big players may not exactly like – one where the ultimate choice on who to buy power from would lie in the hands of the consumer.

No doubt, the ERC under its new leadership looks determined to make this happen. 

This is how President Duterte struck me since day one when he first assumed office at Malacanang last June 30. The President says what he means and means what he says. In other words, President Duterte walks the talk.

It can happen faster and with less resistance from the big players in the energy sector if President Duterte would take a break from the war against illegal drugs and spend a little time to look into the latest power failures.

Perhaps, the same presidential shock and awe can be applied to put everyone on notice he does not want to see the first 100 days of the Duterte administration literally falling into darkness now that power shortage woes are back.