When the Department of Energy (DOE) recently issued a warning about a power shortage in Luzon, said to be inevitable by next summer, several groups instantly became suspicious of the motive behind the DOE announcement.
For one, it was a warning from out of the blue. Consider for a moment that the DOE, under Secretary Carlos Jericho Petilla, has been insisting for the past three years that Luzon would have enough electricity supply up to 2015. Consider also that, for the past three years, the private sector has been warning the government of an impending power shortage in Luzon due to the expected increase in demand.
Thus, the underlying question on the complete turnaround of the DOE is this: Is the threat of power shortage a real one, or is it just another squeeze play of the government?
It was said that the government could be pushing for a controversial coal-fired power plant project in Subic. No wonder some environmentalist groups came out of the cave to ride on the issue, warning the public about some ecological disaster coming from the coal plant.
Reportedly at the center of the newfound position of the DOE—i.e., there would be a power shortage in 2015—was the controversial coal plant project of Redondo Peninsula (RP) Energy.
It so happened that, together with the Aboitiz group and the foreign group Taiwan Cogen, the biggest backer of RP Energy was Meralco, whose chair Manuel V. Pangilinan, known as MVP in basketball circles, has issued the “shortage” warning in 2013. At the time, the DOE fiercely contested the claim.
The Subic coal project has been hanging for the past four years. With its dream capacity of 600 megawatts (MW)—more than enough to avert the feared 2015 shortage—the plant required a huge investment of $1.28 billion. And RP Energy was willing to foot the huge bill.
But the Supreme Court halted the project with its issuance of “Writ of Kalikasan.” The injunction was the only one of its kind in the world. The Supreme Court decision seemingly favored the groups opposed to the coal project.
One of them was this government outfit called SBMA, or the Subic Bay Metropolitan Authority, although it did not actually oppose the use of coal to generate electricity. SBMA merely wanted the DOE to relocate the freaking plant elsewhere out of Subic.
Incidentally, one proposal in the private sector has always been to provide incentives to provinces that will host power plants, by cutting down the electricity rates in those provinces, for instance.
Anyway, some three years ago, business groups such as Philippine Chamber of Commerce and Industry pushed for the establishment of steady sources of power—the so-called “base load” such as coal and hydropower plants. They were more reliable and—more importantly for business and for the guys down here—much cheaper.
As it turned out, while the stormy debate raged for about three years on whether Luzon would suffer from a power shortage in 2015, the DOE presented to media some “sure hit” power plant projects that would address the rising demand.
Guess what? The DOE actually lined up some “renewable energy” projects, such as biomass and wind power plants, which collectively could not even produce 50 MW of power, plus another 100-MW plant that would use the costly “bunker” fuel.
In other words, the projects lined up by the DOE, supposedly to address the rising demand for power, would only worsen the power rates in the country—already considered to be the highest in Asia—despite the promise of redemption from the 13-year-old Epira. That is the Electric Power Industry Reform Act of 2001, known as RA 9136, crafted by the legislature during the cute administration of Gloriaetta. Years later, it was deemed favorable to power industry players because of the “pass-on” feature for power distributors.
The Epira nevertheless did not have provisions for the FIT (fit in tariff) for renewable energy such as wind, solar and biomass plants, which the DOE pushed for when the department was still under Jose Rene Almendras.
Almendras, who is now Secretary to the Cabinet, also backed the RP Energy coal project in Subic as early as 2012, when he warned of an impending power shortage in Luzon by 2015 or 2016.
Almendras explained then that the Subic coal project was the government’s best chance to avert a power crisis, because the group was ready to start construction anytime. Most power plants the size of the Subic coal project would take at least five years for preparation and actual construction. Almendras at the time argued that the project would have to be started right away, and it could save Luzon from the power crisis in the nick of time.
Still, Almendras was also the prime supporter for the FIT for renewable energy—a scheme where a business group that just bought a renewable energy project could enjoy windfall profits at the expense of business and the public in general.
And so nothing happened to Almendras’ crusade, for and on behalf of RP Energy, to establish the coal plant in Subic. Even his replacement at the DOE, the former Leyte provincial governor Carlos Petilla, did not seem to subscribe to the idea of a power “shortage” in Luzon by 2015.
But recently, Petilla changed his tune. He suddenly sounded off the power crisis alarm, and even egged our leader BS to claim the “emergency power” authorized under Epira in times of energy crisis.
The hottest issue in media quickly changed to the power shortage and the emergency power for our leader BS, thus fueling suspicion that the issue could be an attempt to divert public attention away from the DAP controversy.
Look, boss, the main solution of the DOE to the impending shortage was the most drastic one—the granting of “emergency power” to our leader BS! In other words, we would be that desperate by 2015! Rather suspicious, really!
Still, only last summer, the DOE already tried to prevent brownouts by issuing memos to big users of electricity in the business sector—such as malls the size of Singapore—to use their own power generators. Otherwise the entire Luzon would have to undergo rotating blackouts.
The DOE also did not make a big fuss of the memo. It was never reported in media, to start with. And so, there, the DOE memo itself was already an indication of the impending shortage!
Not that the coal plant of RP Energy could still prevent the shortage next year. As everybody knows, it may take about five years to complete a project of such scale in this country, considering the red tape and the limitation in infrastructure, not to mention the congestion at the ports.
The thing is, well, the power business has always been a regulated industry, and everything in it—including which groups should get what power plant projects going and, above all, the power rates—is all the doing of the government.
Against the prospects of loss of thousands of jobs due to hours upon hours of power outages, down here we can only pray.