A different kind of power play

The Manila Electric Co. (Meralco) on Friday announced the increase on electricity rates effective this month due to the rise in the cost of power it sourced from the Wholesale Electricity Spot Market (WESM). As an electricity-distributing public utility, Meralco reiterated it does not earn from the pass-through charges such as the generation and transmission charges but merely acts as the collector of the bulk of charges in the monthly bills from its customers.

Meralco traced the surge of power demand from increased consumption of electricity during the summer months and the gradual recovery of the economy from the impact of the coronavirus disease 2019 (COVID-19) pandemic. Meralco official spokesman and vice president for corporate communications Joe Zaldarriaga explained these to us during the Kapihan sa Manila Bay virtual news forum last week.

Zaldarriaga noted the perked-up economic activities despite the lockdown starting last March and even more with subsequent easing to general community quarantine (GCQ) in the Meralco-franchised areas at the national capital region (NCR) plus bubble that included Bulacan, Cavite, Laguna and Rizal.

It reached peak last May 31 but due to insufficient operating reserves of the NGCP, it resulted to rotating blackouts in the Luzon Grid. Thus, the National Grid Corp. of the Philippines placed the Luzon Grid on either Yellow or Red Alerts from then on.

The Meralco rate hike this month came at the heels of the rotating blackouts implemented by the NGCP at the Luzon Grid. The Department of Energy (DOE) found out that as much as 4,000-megawatts (MWs), or equivalent to 30 or 40 percent total power supply went out of stream in the NGCP’s Luzon Grid allegedly due to the unplanned and unscheduled shutdowns of at least five baseload power plants.

The Energy Regulatory Commission (ERC) reportedly issued already “show cause” orders to the operators of these five generating companies (gencos). The suspicious timing of the alleged major technical troubles of the five gencos took place all on the same day last May 31. Thus, it triggered legislative inquiries one after the other last week by the energy committees at the Senate as well as the House of Representatives. DOE Secretary Alfonso Cusi, ERC chairperson Agnes Devanadera and other top energy officials of the government as well as the top executives of power companies were among those who testified.

They were invited literally to shed light on the feared return of darkness due to looming power supply crisis in the country.

On the first public hearing held last June 4, Pampanga Rep. Mikey Arroyo, chairman of the House committee on energy, deplored the “finger-pointing” among officials of the DOE, the ERC, and the NGCP on who to blame “for the perceived” power supply problem that caused last month’s rotating blackouts in the Luzon Grid. Arroyo disclosed he is still waiting for the submission of the technical reports he asked from these concerned officials to determine the specific measures to further strengthen the country’s power supply situation on long-term basis.

At the hearing, it was revealed the DOE Secretary had also required the NGCP to secure additional reserve power or back-up power supply by forward-contracting ancillary services. This “is akin to take or pay,” NGCP spokesperson Cynthia Alabanza pointed out, which provides that even if the electricity is not used, it will be paid for. “This is the basis of NGCP’s warning for the impending power hike if we are compelled to procure all our reserves on a take-or-pay basis,” Alabanza warned.

Arroyo vowed to summon the same government energy officials and power company executives again in another round of House public hearing later this month. The same set of energy officials and executives appeared in last June 10 public hearing conducted by Sen. Sherwin Gatchalian, chairman of the Senate committee on energy.

Arroyo and Gatchalian are co-chairmen of the Joint Congressional Power Commission that serves as the oversight body created by Republic Act 9136, or better known as the Electric Power Industry Reform Act (EPIRA). Joining Zaldarriaga in last week’s virtual news forum of the Kapihan sa Manila Bay, the two lawmakers agreed to revisit the EPIRA to determine its possible amendments. They both believe the 20-year old EPIRA needs to be adjusted to technology advancements. This is to ensure not only a stable power supply but also to provide reasonable cost of electricity that will make the country more competitive in doing business here.

The ERC, the WESM, the JCPC were all created under the EPIRA in a bid to restructure the power industry sector of the country. The EPIRA also created several spin-off companies like the NGCP when the government privatized the erstwhile state-run power plants of the National Power Corp. (Napocor) and its other assets and properties. This task was mandated by EPIRA to be implemented by the Power Sector Assets and Liabilities Management (PSALM) Corp. to undertake the restructuring of the country’s power sector within 25 years, unless extended by law.

Cusi echoed the sentiments that the government should regain some degree of control on the country’s power supply when he testified at the Senate hearing. Actually, Cusi first broached this idea during our conversations with him at the Kapihan sa Manila Bay last June 1 on our Zoom webinar when he raised this as a good policy debate that Congress could look into. As of latest inventory, the Napocor still operates 276 small power plants in 189 municipalities across 35 provinces in our country.

In the meantime, however, there was a symbolic putting on stream the 300-killowatthour power plant last June 12 to mark our country’s 123rd anniversary of Independence Day. Napocor powered it up at the Pag-asa Kalayaan Island Group located in the disputed maritime territorial waters of the West Philippine Sea. The diesel power plant will provide 24/7 electricity to both military and civilian facilities in the island.

It’s a different kind of power play that at the very least will help secure our country’s territorial integrity through electricity.