Sacking of officials sought as energy crisis looms

President Bongbong Marcos Jr. is being asked to recall his appointment of three high energy officials. This is to gain investors’ and consumers’ trust in the Department of Energy. More so, since DOE itself foresees electricity shortage starting Christmas-New Year and needs industry support to avert ruinous consequences.

Pete Ilagan, Nasecore president, wrote Marcos Jr. Monday, Oct. 17, to take back his placement of Raphael Perpetuo Lotilla as energy secretary. Also, of Monalisa Dimalanta as Energy Regulatory Commission chairman and Dennis dela Serna as Power Sector Assets and Liabilities Management Corp. president.

Nasecore, National Association of Electricity Consumers for Reforms, is a 24-year-old industry watchdog. Founder Ilagan was once energy undersecretary in 2016-2018.

Ilagan called for the trio’s replacement with persons “not tainted by conflicts of interest.” To prevent crisis, he said, DOE needs investor confidence “in a level playing field.”

Lotilla was plucked from Aboitiz Power Corp., where he was lead independent director. Dimalanta and dela Serna were former officers of Aboitiz Power, respectively as chief legal counsel-compliance officer and VP for regulatory affairs. The Electric Power Industry Reform Act (Epira) requires a two-year break before private energy firm execs can join DOE. Although Lotilla as independent director had no executive function, experts nonetheless point up his extended stint with Aboitiz.

 Daily blackouts blight several Luzon and Mindanao provinces and Visayas islands. Lotilla forecasts worse starting January. Hydro-electric plants will generate less while those dependent on fossil fuels will bleed from higher prices of diesel, bunker and coal, all imported. Solar farms and other renewable energy sources are to be put up next year, but won’t operate till transmission lines and sub-stations are installed.

Costly imported fuels threaten to black out greater Manila as well, for which ERC is under fire. Power failures can cripple government offices, factories, hospitals, schools, shops and home enterprises. Yet ERC doesn’t seem to care, critics say. It rejected the joint plea of greater Manila electricity distributor Meralco and two San Miguel Corp. generators for slight, short-term rate increase.

SMC’s South Premiere Power Corp. and San Miguel Energy Corp. have lost P50 billion as of April 2022 due to spikes in coal rates. Pandemic followed by the Russia-Ukraine war broke the supply chain. Production cutback by Russia, Venezuela and the Organization of Petroleum Exporting Countries has spurred shifts to coal and further raised its price.

A small electricity rate increase for six months would have stanched SPPC and SMEC’s bleeding. But ERC ruled last month, three commissioners to two with Dimalanta as tie-breaker, that Meralco and the two stick to their cheap production supply agreements of pre-pandemic 2019. Coal prices have tripled since then. But having approved those PSAs, ERC insisted on sanctity of contracts.

 “ERC was too legalistic,” InfraWatch PH convenor Terry Ridon told Sapol-dwIZ Saturday. In a court, one can go strictly by law, said the lawyer and former House energy committee member. But as regulators the three commissioners should have considered factors beyond one contract. Like, the Epira requirement that electricity policy consider “the least cost to consumers.”

“What if the generators opt out?” Ridon warned. Meralco will be forced to buy from the Wholesale Electricity Spot Market, which is always pricier. “If that happens, will the ERC then insist that the WESM supplier charge less than what SPPC and SMEC do at present?” If ERC allows higher, it will violate Epira.

A week ago Ilagan also complained to Marcos Jr. about the ERC verdict. SMEC and SPPC are Meralco’s second and third cheapest among 12 suppliers at P3.74 and P4.27 per kilowatt-hour. Most other suppliers have “pass-through” provisos that allow them automatic generating price escalation. Most expensive is Thai-owned Quezon Power, at P13.34/kWh, three times more than SMEC and SPPC.

Such suppliers push up Meralco rates, wrote Ilagan who hails from Leyte, one of Marcos Jr.’s two home provinces. They also are to blame for soaring electricity rates in Leyte-Samar and Isabela, P12.86 and P9.84/kWh.

Two dissenting ERC commissioners sided with Meralco, SMEC and SPPC for provisional rate hike. ERC’s own Regulatory Operation Service and Tariffs and Rates Division Engr. Alvin Jones Ortega confirmed that granting the price adjustment was the “cheapest option” for consumers.

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