The Department of Energy (DOE) is about to run something quite novel. They call it the country’s first “mid-merit capacity auction.”
This is an auction for bidders to supplement the country’s energy supplies. But it is limited only to gas-fired power plants. Coal and renewable energy producers need not apply. In which case, it is only a partial auction. Power plants that may offer lower prices but use something other than gas are excluded.
Filipino consumers presently pay the highest energy costs in the region. One might think the DOE ought to give primary importance to the price rather than the mode of generation.
Energy Secretary Sharon Garin is quite explicit in declaring a policy preference for “mid-merit” capacity. Coal is cheap but slow. Diesel is fast but costly. Gas is the compromise choice for rapidly supplying energy when the need spikes. The additional gas plants envisioned is intended to supplement electricity available through the spot market.
The past months, electricity in the Visayas suffered from thin reserves, leading to a series of red and yellow alerts. But in the Luzon grid, which consumes 2,900 of the 3,800 megawatts we generate. Luzon’s supply margin grew by 632 MW. Reflecting the surplus, average spot price fell to P4.80 per kilowatt hour.
The DOE reasons that enough power is not the same as flexible power. The coal plants that supply our base load capacity are meant to run steadily. They are not designed to be switched on and off as energy demand fluctuates.
The drop in evening consumption demand strains our coal plants. More solar energy will make the evening ramp steeper. The DOE figures that what we need is more rapidly deployable gas power plants.
But the DOE makes no effort to convince the public that gas is the cheapest option. The country imports all of its oil needs. We import about half of our natural gas needs. The prices of both fluctuate according the whims of geopolitics or the steady depreciation of our currency.
The price effects for our consumers is not insignificant. According to the terms of the “mid-capacity auction,” a winning plant is paid the auction price plus its fuel cost. Any shortfall between that and what the power earns in the spot market is collected from the consumers.
In the Luzon grid, spot prices averaged P4.80 in August. A typical Meralco household paid P14.74 per kWH. According the one study, increasing LNG capacity will add from 25 to 90 centavos per kWH. A household consuming roughly 200 kWH will have to shell out somewhere between P45 to P180 a month.
The new DOE policy preference excludes other sources of energy that could bring prices down.
Evidentiary gap
Without intending to, Sen. Panfilo Lacson stumbled into a credibility contest with the City of Taguig.
Lacson tried to taint Sen. Alan Cayetano with accusations of faulty infrastructure projects in his bailiwick. Failing to find a failed project, he focused instead claiming Taguig City was engaged in illegal reclamation of Laguna be Bay.
For someone who built a rather solid reputation as a police officer, Lacson’s latest allegation was completely devoid of evidence. He must have thought he could pull this off with just a short video clip of the shoreline coupled with the claim that his rival was doing things with “impunity.”
The Taguig city government was not about to let him get away with a grave allegation built on absent evidence. In a sharply worded response, Taguig seized upon the glaring evidentiary gap. The short video, says the press statement, “does not involve any land presently possessed and used by the City of Taguig.”
The parcel of land where some amount of reclamation does appear to be going on is claimed by several private individuals and a neighborhood association. The city government had not issued any permit or authority in favor of the private owners of that parcel of land.
Furthermore, the response expressed concern the short video leaves the public with the impression that Taguig itself was undertaking the illegal activity. To the contrary, the city government affirms its commitment to the fight against corruption and pledged to investigate the apparent reclamation activity itself.
“The fight against corruption,” the statement reads, “must always be a fight for truth – not a contest of accusations.” A clear distinction must always be maintained between accusation and proof. The accusation Lacson makes is not supported by a shred of proof.
Lacson, of all people, must appreciate the importance of supplying every accusation with enough proof. In his colorful career as a police officer, he served with the Metrocom Intelligence and Security Goup during martial rule. This unit developed a fearful reputation among human rights advocates.
Lacson himself had to go into hiding after serious accusations were leveled against him, including the massacre of 11 Kuratong Baleleng members and the Dacer-Corbito double murder case. He was saved by the Court of Appeals finding the warrants of arrest issued against him did not meet the standards of probable cause. Today he must find consolation in the thought that accusation alone does not establish guilt.
To date, Lacson has not responded to the statement of the Taguig city government. This is not the first time he made accusations extending beyond what available evidence might support.