Groups urge Duterte to prioritize RE policy reforms

By Lenie Lectura July 28, 2020
https://businessmirror.com.ph/2020/07/28/groups-urge-duterte-to-prioritize-re-policy-reforms/

Clean energy advocates led by the Power for People Coalition (P4P) and the Withdraw from Coal (WFC) network wants the Duterte administration to prioritize reforms in the power sector, particularly on renewable energy (RE).

The groups said Monday that President Duterte highlighted the need to fast-track the development of RE sources and reduce dependence on coal during his 2019 State of the Nation Address (SONA). This task, they said, was entrusted to the Department of Energy (DOE).

Gerry Arances, convener of P4P, is hoping that the government would prioritize the RE sector.

“We welcomed the President’s pledge in 2019 in the hope that it would finally spark change in a power sector that, for so long, has been highly polluting and systematically anti-consumer.

It indeed was followed by advances in the implementation of the remaining mechanisms of the Renewable Energy Law, over a decade after it was enacted.

“But the 21 coal projects still in the pipeline are telling of the administration’s failure to really advance renewables and end reliance on coal and other fossil fuels,” said Arances.

The groups said the pandemic revealed deep-seated problems in a power sector characterized by privatization, competition, and deregulation as enabled by the Electric Power Industry Reform Act, for which government interventions are already long overdue.

“This old normal, which harms our environment with the proliferation of coal and other fossil fuels and leaves our marginalized sectors at the mercy of private corporations, cannot continue.

Our government may have gotten away from responsibility before by simply backing promises for better energy with more pledges or excuses, but the time we are in is different. The gravity of the crisis as experienced by the poor and vulnerable must be reflected in the administration’s ways forward,” said Bishop Gerardo Alminaza, convener of WFC.

The advocates called on the government to provide immediate relief packages for the people and work toward the betterment of the power sector.

“The millions of suffering electricity consumers would surely benefit from payment exemptions, suspension of taxes, and immediate return of refunds owed by companies…all of which are solutions that President Duterte and his Cabinet can and must advance.

“Existing power contracts detrimental to consumers, especially those of coal that pass on hidden costs to end-users while locking them to decades of unreliable electricity, also need to be stopped. With the decline of electricity demand, an audit of all power supply agreements, starting with Meralco’s, must also be done to protect consumers from price hikes due to stranded costs,” said Ian Rivera, national coordinator of the Philippine Movement for Climate Justice (PMCJ).

WWF Philippines, meanwhile, said that advancing RE to replace the old normal, as urged by the President himself last year, is crucial to national recovery.

“Recovery plans must seek to rebuild the economy and strengthen its resilience to future crises. At the same time, they need to address the people’s pressing dilemmas of rising costs of living and widespread loss of jobs,” he added.

“Renewable energy, especially in the form of microgrids, and energy efficiency measures offer solutions to these. In urban centers, it could provide cheap electricity while creating more job opportunities than fossil fuel industries can ever offer. Because it can be designed to adapt to any terrain, microgrids can also power far-flung communities and address the decades-old problem of 100 percent electrification,” explained Atty. Gia Ibay, Climate Change and energy program head of WWF Philippines.

The clean energy advocates carried the said calls as they joined the many groups mobilizing under the “SONAgkaisa” banner on Monday.

“We do not have the time for the President to go back and forth with his directives, or for the government to ignore the many blemishes of the power sector that were made obvious by Covid-19. The immediate survival of our people and their quality of life in the long term are at stake. The government must plan and act with this in mind,” said Arances.

2019 power peak demand up by 5.4%

By Jordeene B. Lagare July 27, 2020

https://www.manilatimes.net/2020/07/27/business/business-top/2019-power-peak-demand-up-by-5-4/746457/

ELECTRICITY demand in the Philippines peaked at 15,581 megawatts (MW) in 2019, up by 5.4 percent from a year ago, according to the Department of Energy (DoE).

In its 2019 Power Situation Report, the DoE said last year’s peak demand was higher than the 14,782 MW recorded in 2018.

Citing data from the system operator, the Luzon grid took the lion’s share at 11,344 MW, or 72.8 percent of the total demand. This was an increase of 4.3 percent from 10,876 MW.

The Visayas grid registered a peak demand of 2,224 MW, representing 14.3 percent of the 2019 peak demand. It was 8.3-percent higher from 2018’s 2,053 MW.

Meanwhile, the Mindanao grid contributed 2,013 MW, or 12.9 percent, to last year’s peak demand. It was up by 8.6 percent from 1,853 MW.

The country’s gross domestic product (GDP) fell to an eight-year low of 5.9 percent in 2019 on the back of budget impasse, which resulted in delays in the implementation of government programs and projects.

Although the GDP in the fourth quarter of 2019 climbed to 6.4 percent, it was still not enough to meet the target economic growth ranging from 6.0 percent to 6.5 percent.

“Nonetheless, historical data has shown that when the Philippines experienced an expanding economy or a positive GDP growth rate, that expansion was directly proportional to electricity consumption. Therefore, correlating the relationship between the two, a continuous GDP growth entailed a consistently rising demand in electricity,” the DoE said in the report.

Total electricity sales and consumption grew by 6.3 percent to 106,041 gigawatt hours (GWh) in 2019 from 99,765 GWh of the previous year.

Residential sector accounted for the largest consumption at 28.8 percent, followed by industrial (26.6 percent) and commercial (24 percent).

The industrial sector is the sole sector whose annual growth rate took a downswing from its rapid increase of 7.9 percent in 2018 down to only 2.2 percent in 2019.

The DoE said the segment’s decline can be attributed to the slowdown in public construction at the start of 2019 as a result of the delayed approval of the 2019 national budget and the 45-day public works ban due to the national and local elections last May 13, 2019.

“Likewise, the reduction in public infrastructure spending, hence lagging in construction-related manufactures, and the weaker global economy resulted in a decrease in both volume and value of the manufacturing sector, only improving in the latter part of the year bolstered by the surge in public spending of 54 percent or P100.3 billion in September as state agencies expedited the implementation of major infrastructure projects as part of their catch-up measures,” it added.

On the other hand, residential and commercial sectors recorded a surge in power consumption due to election-related activities and warmer temperature in the summer months.

The continuous rise in global surface temperatures primarily contributed to the uptrend as heat indices hit dangerous levels especially in the months of April, May and June.

“Moreover, the El Niño event throughout the year is a likely driver of the variation in consumption especially in households and commercial spaces e.g. an increase in consumption can be attributed to substantial utilization of cooling equipment,” the report stated.

The Energy department had projected this year’s power demand would likely remain at the same level in 2019 due to the coronavirus quarantine implemented in Luzon and other parts of the country.

Although the agency observed the residential sector’s demand surged significantly during the lockdown, it could not compensate for the plunge from the industrial and commercial segments.

Power demand in the Visayas and Mindanao did not decline as much since residential customers have been driving demand in the two regions.

Sale of Malaya plant, property rescheduled

By Jordeene B. Lagare July 27, 2020

https://www.manilatimes.net/2020/07/27/business/companies/sale-of-malaya-plant-property-rescheduled/746433/

THE auction of the 650-megawatt (MW) Malaya Thermal Power Plant and its underlying land in Pililia, Rizal was further deferred, according to the Power Sector Assets and Liabilities Management Corp. (Psalm).

The state-led firm, in its latest supplemental bid bulletin, announced the bid submission deadline is rescheduled to September 3 at 12 noon.

Psalm previously set the deadline of July 30 to submit proposals in view of the third-party updating of the Malaya thermal facility’s financial valuation before the Psalm board of directors sets the minimum bid price for the power asset.

PricewaterhouseCoopers Philippines has been commissioned as the consultant for the valuation of the power facility and its underlying property.

Moreover, Psalm will release the final asset purchase agreement (APA) to qualified bidders on August 20 or not later than seven days prior to the deadline.

Psalm will also announce the minimum bid price to all eligible bidders through a supplemental bid bulletin after securing its board’s approval.

The issuance of the notice of award and Psalm executed APA to the winning bidder is now set on September 30 or within 30 days from declaring the highest-ranking bidder.

The execution of the new accord between Psalm and the winning bidder’s assignee and submission of assignment security shall occur within five working days from the approval of the request for assignment by the winning bidder.

The submission to the Philippine Competition Commission is set on October 21 or earlier as agreed by parties involved.

The closing date for this transaction shall take place on November 25 or two business days from closing.

The Malaya thermal plant is operational and being dispatched as a must run unit but the Department of Energy had said the facility is no longer required to operate as such upon its privatization.

Conducting the third round of public bidding for the Malaya thermal facility and its land is part of Psalm’s mandate to settle financial obligations that Psalm assumed from the National Power Corp.

The state-run firm’s financial obligation fell to P404.28 billion as of May 14 from P422.01 billion in the first quarter of 2020.

Cutting the cost of electricity

posted July 27, 2020 at 12:10 am by  Orlando Oxales

https://www.manilastandard.net/opinion/columns/open-thoughts-by-orlando-oxales/329664/cutting-the-cost-of-electricity.html

I have learned to accept the reality that this pandemic is not going to go away soon. Like most households, we are constantly looking for ways to cut costs and consumption in anticipation of a prolonged economic slow down and the complex socio-economic challenges that will surely come. Adding to the anxiety in these difficult times is the rising cost of commodities that I am sure all consumers are feeling every time they go to the grocery store. This is a direct observation by my in-house price monitoring expert, my wife, who is so efficient in flagging every movement in grocery prices.

Several congressional hearings have been held to probe into the effects of the pandemic on the economy and how prices are moving since the lockdowns started. Most covered by media were the hearings that probed into the confusion in electricity bills which affected not just Meralco customers but many electricity cooperatives nationwide, which I said in an earlier column, was a case of how a faulty policy of the regulators caused unnecessary confusion for consumers and the whole power industry. As Meralco continues to handle each customer query one-on-one and billings are back to its normal cycle, disruption to meter readings can be avoided as this is a non-contact routine that can safely be done.

In the wake of this issue, another inquiry by the House Committee on Good Governance and Public Accountability probed into the Energy Regulatory Commission and Meralco’s efforts to lower the cost of electricity so as to lighten the burden of consumers.

Meralco officials presented the action they have initiated to ensure that electricity rates are at levels that have been constant for over 10 years. Cited were the current rates which are lower than 2018 levels. Meralco also invoked the “force majeure” claim allowed in power supply contracts. This reduced fixed charges for generation capacity that would have been charged by suppliers. This translated to P1.8 billion in savings which would have been otherwise added to the bills of Meralco’s customers.

Always targeted in these kinds of investigations is the process of procuring the power that will be distributed to the electricity consumers which according to Meralco’s franchise mandate, must go through the “Competitive Selection Process (CSP)” in compliance to Department of Energy policies. The process is overseen by a third-party committee and approved by the Energy Regulatory Commission (ERC). The CSP conducted in December 2019 resulted in a price cut of over P1.00/kwh resulting in cumulative savings of P4.6 billion for consumers.

A recurring issue raised is the system loss charge which I remember has been explained and even demonstrated by engineers during past congressional hearings to be an inherent reality when electricity is conducted through wires for long distances. Unlike in other countries where the system loss charge is incorporated in costs, our unbundled electricity bill clearly this cost which aside from the natural loss caused by the distance from source to consumer, is affected by pilferage from illegal connections.

In response, the ERC ensured that systems loss caps will continue to be adjusted by electricity distributors. The cap for private utilities now set at 7.5 percent will be cut to 6.5 percent in 2021. For electricity cooperatives, a reduction to 9.25 percent from 13 percent will be implemented in 2022. As for Meralco’s franchise areas, the system loss charge is now the lowest on record at 5.42 percent set last March. This is another P50 billion in savings for consumers since 2008.

If you recall, the sudden spike in generation costs in the months of November and December 2013 sparked several allegations of market abuse and collusion by some power generators. Meralco appealed for government intervention and supported the ERC’s decision to stop the increase bringing down the generation charges to more acceptable P5.93/kwh which is a whopping P3.17 lower than the P9.10 that generators wanted to charge. This became the basis for adjusting the January 2014 charge to P6.11/kwh from P10.22/kwh planned to be billed to consumers.

The Supreme Court recently affirmed the ERC’s order to adjust the Wholesale Electricity Spot Market (WESM) prices in the third and fourth supply months in 2006 which effectively saved customers from paying an additional P6 per kwh on the generation charge. This was prompted by Meralco calling for an investigation by the Philippine Electricity Market Corp. (PEMC) on suspected cartel-like behavior. Unchecked, this would have cost consumers P9 Billion in additional pass-on rates.

As a Meralco customer, I hope that there will be more cost-cutting measures to be initiated by the regulators and the power industry especially while we are all grappling to survive this global crisis.