Tight

FIRST PERSON By Alex Magno (The Philippine Star) | Updated April 12, 2014 - 12:00am

The official assessment is that the available power supply has “tightened.” What that means is that the difference between supply and demand has become razor thin. Any abrupt movement in demand or supply spells power outages in the hottest months of the year.

Several power generating plants suffered “unscheduled shutdowns.” Read that to mean they conked out, for one reason or another.

Remember, a great number of the generating plants we rely on are very old. The venerable plants deserve to be treated gently. They are not likely to survive forced marches brought about by “tight” power supply.

According to the latest bulletin, the following plants will be on forced outage for April: Pagbilao 2, Tiwi 2, Masinloc 2, Malaya 1, Limay 2, Sta. Rita 4, the Angat mini-hydro 3, Macban 5 and Bacman 2. In addition, several other plants will be on planned maintenance shutdown this month and will not be operating at maximum capacity. These are: GN Power 1, Sta. Rita 1, Makban 1, Magat 1 and Calaca.

We are not told how much power is taken off the grid because of this. The number of plants on planned and unplanned outage, however, suggests we have barely enough power to prevent rotating brownouts. A “yellow alert” has been raised for such an occurrence.

This is not good news for businesses, of course.

When blackouts hit households, we can only curse the darkness. When blackouts hit factories, production is lost. The viability of enterprises comes under severe test.

When our economy reeled under power shortages in the last years of the Cory presidency, the costs were large. Billions in investment were lost. Tens of thousands of workers lost their jobs. Opportunities evaporated. This was a time of economic contraction. It was the period when we saw our labor-intensive light manufacturing sector migrate elsewhere.

According to studies done by multilateral institutions, the high cost of doing business in this country is a major factor discouraging long-term investments. It is not only the price of energy that contributes to that cost of doing business. The unreliability of power supply will have to be counted as a cost.

If we look at it in terms of the number of jobs we could possibly lose, the misery this will add to our citizens, especially the poor, and the distortions this will cause our economic future, power uncertainty will have to be the greatest threat to our national security and wellbeing.

Notwithstanding the magnitude of the threat energy insecurity poses, government seems to lack the sense of urgency to do something about it.

The data shows that from 2001 (when sustained economic expansion began) to 2013, peak demand for the Luzon grid along increased by 47%, from 5,646 MW to 8,300 MW. This is an increase of 2,659 MW.

Yet, over the past few years, no major base load plant has been added to the grid except for the 600 MW power plant in Bataan. That plant has a dependable capacity of only 495 MW.

What this means is that demand outstripped base load capacity by around 2000 MW. This is the reason we are using the more expensive peak load plants to meet base load demand.

Eventually, this is the reason why our power costs have not gone down, despite the added use of coal and gas plants to displace reliance on diesel plants. The high cost of electricity suppresses the growth of our manufacturing sector, adding to our unemployment woes and rising poverty rates.

In a word, the feeble response to our glaring energy security issues played a large role in the distortion of our economy: the fact that we experienced exclusive rather than inclusive growth. It is the poor ultimately penalized by government incompetence in closing the infrastructure gap.

Let’s not even talk of the rotating blackouts that plagued Mindanao for years. The Luzon grid will have a capacity deficit of 184 MW in 2015 and 635 MW in 2016 if no new capacity is added and if none of the old plants die on us.

The only assurance we get from this government is that the committed 600 MW LNG project of Energy World Corporation in Pagbilao, Quezon will come on line during this period. In a recent forum with businessmen, however, Energy Secretary Jericho Petilla admitted that the Energy World project might be delayed.

That is shuddering news that somehow evaded the headlines. In the community of investors, however, this is taken as a signal of forthcoming calamity. It signals the certainty of power shortages.

Note that the 600 MW new capacity promised by the Pagbilao project is not even enough to meet the additional demand for 2016. That is even supposing the new plant delivers its full rated capacity, something we are not sure of.

As mentioned above, we are relying on expensive peak load plants to meet base load demand. That means the costlier, less efficient small plants are pressed into the service for longer periods. That seems a formula for constant breakdowns.

Base load plans should have been delivered earlier, but were not. The former energy secretary responsible for that failure, Rene Almendras, was promoted secretary of the Cabinet and a provincial governor named to replace him. That does not seem to indicate this administration fully appreciates the critical nature of the problem.

Meanwhile, those who complain the loudest about the high cost of electricity in this country are also constantly protesting every new power project brought to the table. Our screwed up politics produces this screwed up energy outlook. source