ROTATING BLACKOUTS were observed in Metro Manila and surrounding areas as Manila Electric Company (Meralco) repaired poles, transmission wires and other equipment ravaged by Typhoon Glenda last July.
Not long after full power restoration in most areas, Department of Energy (DOE) Secretary Jericho Petilla warned of an imminent 200-megawatt power supply deficit next year, not due to typhoon damage, but because of the scheduled Malampaya natural gas facility maintenance shutdown in March 2015. The facility provides gas for three power plants in Batangas province, namely the Sta. Rita, San Lorenzo and Ilijan plants. These then transmit power to distributors other than Meralco in the Luzon grid.
Petilla said that if not addressed as early as now, there could be rotating blackouts that could last a month in the summer, when demand is at its peak.
Energy reform revisited
Department of Environmental Science (ES) Assistant Professor Aileen Guzman, who has a doctorate in ES and specializes in renewable energy and energy return of investment, cites the failure of the market to respond to the country’s energy needs as the fundamental problem behind the looming shortage. She says this brings up a bigger question on the success of power industry reform in the Philippines.
Guzman is referring to the Electric Power Industry Reform Act (Epira), enacted in 2001, to privatize the power industry and forbid government ownership of power plants. Established to rouse competition in the industry, its long-term goals included bringing down electricity rates by deregulating power generation and supply through the Power Sector Assets and Liabilities Management Corporation (Psalm) and forming the Energy Regulatory Commission (ERC) to ensure a competitive power market.
Through the Psalm, power plants formerly owned by state-run National Power Corporation (Napocor) were sold to independent power producers (IPPs). Napocor’s primary function now is for Mindanao and for off-grid electrification.
While partial deregulation has been achieved through the transfer of Napocor’s assets to Psalm, Epira’s goals have still not been fully realized. Competition in the Wholesale Electricity Spot Market remains to be dominated by four main IPPs, namely the Aboitiz, Lopez, San Miguel and George Ty groups.
Lack of competition in power generation hampers the maximization of resource capacity—ERC restricts an IPPs’ control of installed capacity to 30% at the grid level and 25% at the national level—thus, raising electricity rates and limiting the supply.
No power emergency
In July, Petilla suggested that the president declare a state of power emergency. “I have been meeting with [President Benigno “Noynoy” Aquino III] about this as far back as February and March this year. I recommended [that he] invoke Section 71 of the Epira,” Rappler quoted him saying.
Section 71 of Epira allows the president to order the construction of power plants in the event of a power emergency.
Petilla recanted his statement in August, saying that there would be no need for the declaration should additional generation capacity be contracted to augment the projected deficit. The DOE is working with the Lopez group, one of the country’s top IPPs, to lease buffer capacity from First Gen Corporation’s power plant complex in Batangas. This will keep the three Malampaya-supplied plants productive during the shutdown. As of August, there has been no final agreement.
Meanwhile, Meralco is looking into expanding the Interruptible Load Program (ILP), wherein large customers like business establishments and factories will use their own generating capacity during peak hours. “This will ‘free-up’ a certain power capacity in the grid. The freed-up power capacity can then be used by Meralco to serve other customers,” explains Guzman.
However, Guzman warns that the ILP is merely a short-term solution that depends on the supply and demand balance. She says that demands will increase eventually and exceed the reserve capacity of those with backup generations leading, still, to power outages.
Life in darkness
Guzman says that the picture of the energy situation is bleak for Mindanao, where only 66% of potential electricity connections are served. Mindanao remains unconnected to the national power grid, preventing power surplus from Visayas from flowing in.
The city of Zamboanga, one of Mindanao’s economic hubs, is reported to have daily outages that last for eight hours on average, and extends to 10 hours or more during bad days. Operations in different establishments, like malls and restaurants, are interrupted. The lack of warning as to when the power would go on or off results in the breakdown of appliances. In an interview with the Philippine Daily Inquirer, Pocholo Soliven, president of Zamboanga Chamber of Commerce and Industry Foundation said that the effect goes as far as losing profit from the added cost of broken equipment.
Soliven mentioned that micro, small and medium enterprises are the most affected because they remain dependent on the electricity from the Mindanao grid.
Collective effort
Efforts are also being made by non-governmental organizations like One Million Lights-Philippines (OML-PH) to alleviate problems brought about by the power crisis.
OML-PH provides people in off-grid areas with safe lighting, distributing solar powered lights to replace costly and potentially harmful kerosene lamps. Usage of kerosene lamps has a negative impact on both people’s health and the environment. Moreover, it is a costly expense for people who have a meager income.
“It’s durable and heavy duty, making it the best option for beneficiaries who need a reliable light for everyday use,” says OML-PH Externals Head Cassandra Deluria on “The Great White Light,” the solar light model that the organization usually distributes.
Binni Monfort, a management economics freshman and OML-PH head for volunteers, shares that most of the communities they visit are situated in the mountains and far areas, some even impossible to be reached by vehicles.
As of now, they have distributed a total of 11,940 lights throughout the Philippines. Monfort says that for 2014, the organization’s funds are mainly for post-Yolanda efforts.
About the impending 2015 shortage, Deluria believes that OML-PH’s solar technology can help, although the organization has not expressed direct involvement as energy issues concerning Metro Manila are outside their current scope.
“I personally believe that renewable sources of energy are the solution to our energy problems, and it will take a lot of collective effort and will on our part, the part of our government and the private sector,” Deluria explains.
“Perhaps it is about time that the government [revisited] the Epira and [looked at] possible ways to improve the system,” Guzman says. She adds that solutions should be based on long-term planning. This would entail looking into policies and not just immediate solutions.
Guzman suggests that demand-side management—providing incentives for consumers to lower their energy demand—be explored. The shortage would be felt during peak hours, but if initiatives to shift usage of power to non-peak hours are undertaken, demand will be reduced.
