Powering up

Manila Standard Today

Towards the end of December, the new Energy Secretary started sounding alarms about a looming power shortage this year. As the gathering economic recovery continues to boost power demand, and if we go through the same kind of bruisingly hot summer we had last year, it is possible, he warned, that one of the major power plants that supply the national grid might conk out. Thus he urged the plant operators to stick to their maintenance schedules, and I’m sure that backstop energy conservation programs are being readied as well.There is nothing new about these warnings, which we’ve been hearing for years now. The biggest long-term power deficit lies in the Visayas, especially the western islands, which would likely be hit first by any recurrence of day-long brownouts. The Mindanao region, with its over-dependence on hydro sources, already went through the wringer last summer when El Nino dried up its reservoirs and stilled its dams. Even Luzon, which theoretically still enjoys a slim power surplus, remains vulnerable to the prolonged shutdown of a single plant, as we experienced with the San Roque facility after excessive water was released from its dam during the superstorms of 2009. This habit of preparing too little too late is unfortunately a national syndrome. And it is on display as we head into another power crisis this year, powerless again to do anything serious because, in this case, it takes at least two years to fully commission a new plant from ground up. In short, whatever we do now will not help us much for a long, long while—although it might still make a difference just in time for the elections of 2013, when the country renders its mid-term judgment on the Aquino presidency. Secretary Jose Rene Almendras is a serious man, a veteran private sector executive whose last assignment was at the helm of one of the private water utilities in Metro Manila. He is also a first cousin of the former Environment Secretary and now Presidential Adviser on Climate Change, the fetching Bebet Gozun, and we trust that this relationship will help to keep him favorably disposed toward green energy programs. But right now the problem he faces is one that affects not just the fringes of the energy issue, but the very heart of it—the structural shortfall in the country’s baseload power generating capacity. We can only wish the best for the Secretary—and, from him, the political will needed to act decisively now, followed by the political clout he will also need afterwards in order to hold onto his seat until his decisiveness—years from now—finally bears fruit. *** One development working in the Secretary’s favor is the onset of La Nina this year, which brought storms over the Christmas holidays and is expected to linger all the way to May. If the weather stays unseasonably cool and wet through summer, it will help to keep our hydroelectric plants operational even in traditionally bone-dry months, as well as taking the edge off the usual heat-related discomfort caused by air-conditioning losses during brownouts. Unfortunately, other mishaps may intrude to raise tempers again—this time, the unfortunate trifecta of rising oil prices in a volatile global commodity market, increases in road tolls as rate step-ups in concession contracts kick in and the government starts to wean the public away from subsidies, and—in consequence of these two unrelated developments—hefty hikes in public transport fares. All of this is simply the working in one way or another of markets that are reasonably free, efficient, and rational, but don’t expect the usual ideologues to be impressed or placated. As usual, they will take their disorder to the streets again, which of course will not help at all with foreign investor sentiment. Not, mind you, that we expect the ideologues to care, in view of their principled opposition to foreigners, to investment, or to any joining of the two. One might almost suspect that they are in fact invested in our continuing underdevelopment, which serves to give people an excuse to continue to listen to them. *** ... (Readers can e-mail gary.olivar@censeisolutions.com)