Monday, January 13, 2014

Senate is waiting for Palace’s ‘electricity bills’-Recto

MANILA-Malacanang has been urged to submit its  “electric bills” to Congress as soon as possible so that legislation needed to prevent power price spikes and blackouts in the future  can be hammered out.

Senate President Pro Tempore Ralph Recto said Energy officials should be “burning the midnight oil” by now in crafting proposed amendments to the Electric Power Industry Act (EPIRA), the Presidential Decree (PD) 910 on the use of the Malampaya gas proceeds, and other laws that will remove chokepoints in the building of power plants.

“The DOE guys have good proposals. That agency is not suffering from a mental blackout. All they have to do is package them in one reform legislation,” Recto said.

Recto likened the EPIRA to a power plant “which has been in operation for 12 years and is therefore due for some recalibration.”

But on proposals to grant President Aquino emergency powers,  Recto said  “ it is up to the President to demand them  but my view is that it should be the legislation of last  resort.”

“It is also a move fraught with political risks because once he has it, the onus of solving the energy crisis falls on him.  If electricity rates will go up, for example, the people will expect him to tame the increase on the mistaken belief that he has the power to moderate them.”

“In other words, emergency powers is politically high-voltage that it can electrocute him. People will see it as the magic wand that can make high power rates go away or power plants go up in an instance,” he said.

One proposed amendment to the EPIRA, as broached by Energy Secretary Carlos Jericho Petilla,  is to   lift  the  prohibition against the government in operating a plant.

Another portion in the EPIRA which must be revisited is its inability  to dispose  the mountain of  National Power Corp. (Napocor)  debts  which piled up due to soured loans, scuttled plants like the Bataan nuclear power plant, and pricing policies.

This  “stranded cost” was pegged at P900 billion which, Recto explained, “migrated to the state and to the consumers’ pockets” in the form  of “universal charge” in electricity bills, as proceeds from the fire sale of Napocor’s assets  hardly made a dent on its obligation.

Recto said another law  which must be rewritten is PD 910, after a section of it which gives carte blanche  powers to the President to spend energy development royalties  for non-energy projects was struck down by the Supreme Court as unconstitutional.

He explained that unless the PD is amended, the government is barred from using dividends of the Malampaya gas production for activities other than “energy resource development and exploitation.”

Recto believes restrictions on the use of Malampaya income be lifted so that it can be spent for purposes still energy-related in nature, like the repair of power lines downed by typhoons.

“We should also be open to the possibility of tapping it to mitigate steep power rate hikes, during times when plants using more expensive fuel go in line to fill the void left by plants undergoing periodic maintenance,  ” he said.

Recto said transparency provisions in both the EPIRA and PD 910 must be strengthened to prevent a repeat of the recent fiasco when high power rates were negotiated in an electricity market  marked by regulatory failure .

Any environment which encourages price collusion must be expunged, he said.

But according to Recto, the most important bill which the Palace must consider is the removal of constraints in building new plants,  “in light of the universal consensus that massive blackouts loom  beginning next year.”

The DoE said the Luzon grid alone would  be needing  1,000 MW  every three years to meet the growing demand  fueled by rising population and economic growth.

From 2001 to 2013,  Luzon peak demand of electricity  surged by 2,659 MW , from 5,646 MW to 8,300 MW.

Except for the 652 MW coal-fired plant in Bataan, no other plant was commissioned during the period which means demand dwarfed new base load capacity by around 2,000.

Recto, however, said that while Luzon has total dependable capacity of 11,466 MW, roughly one-fifth of this come from hydroelectric plants. “As such, they are at the mercies of the weather.  They are often deemed as God-operated plants.”

While “on paper” proposed plants collaborate for a total  committed capacity of 1,468 MW  that will go on stream  from 2014  to 2016,  Recto insisted “measures, whether legislative or administrative, must be proactively thought of so they will be completed as scheduled.”

“Contingencies must be in place and the kinks must be identified this early and so with the ways on how to iron them out,” he said.

“We should remember that the costliest electricity is the one that doesn’t come,” Recto said.


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