Here we go again, applying political solutions to engineering problems.
When the power crisis in Mindanao grew in proportion, finally attracting the attention of national media, our Congressmen jumped on the problem by proposing emergency powers for the President. What those powers might be and how they might solve the crippling shortfall is not yet clear.
Most of the senators, for their part, seem completely mystified by the proposed political solutions. To a man, the senators appeared cool to the idea.
The Palace, for its part, did not quite comprehend what the proposal is all about, preferring to step back and say the President will wait for the House to come up with a draft bill so that it may be studied. The unenthusiastic response from Palace spokesmen is understandable — emergency powers sounded like a lot of new workload.
It is bad enough the President had to do awkward poses, such as carrying heavy folders, to convince the people he was hard at work. It must be a terrifying idea to be thrust extra powers and be expected to pull, like rabbit out of the hat, new generating capacity where there is none.
New generating capacity for Mindanao will start coming online in 2014 at the earliest. By the time new capacity becomes available, rehabilitation of aging hydroelectric plants may have to commence. The new generating capacity being built, even if they all come in on schedule, will still be short of rising demand for power in the island.
However we look at it, the gestating generating capacity is still well behind the curve. Rising demand will outstrip new capacity. The island appears doomed to rotating brownouts for years to come.
Ideally, new generating capacity should be planned ahead of the curve. Almost everywhere else, reserve generating capacity is constantly maintained. Power shortages are always more costly than subsidizing reserve capacity. In Japan, for instance, capacity exceeds demand by almost 50% as a matter of policy.
In contrast, we tend to introduce new generating capacity only when a shortfall looms. That is reactive rather than proactive. The shortfall we are experiencing is a symptom of weak planning capacity.
The brownouts in Mindanao must be causing so much pain that people there now imagine grand conspiracies behind the electricity shortages. To be sure, there is less business risk for power producers to be running at full capacity all the time and selling all they generate to a hungry market. The costs of shortages, however, are borne by everyone else.
It is the task of government to view things from commanding heights, ensure both the public good and the requirements of economic expansion. Government should constrain the power producers to maintain more capacity than presently required so that the larger economy is protected from energy uncertainties. Government must also ensure competition is always present in order to bring out the disciplines that result in efficiency.
There is failure on all counts.
Government allowed power producers to play on the ledge, maintain generating capacity at levels that merely match current demand, thereby assuring them optimal profitability. That leaves the larger community unprotected from shortages. Without an adequate surplus capacity, there can be no competition.
There is no conspiracy, just plain failure on the part of government to exercise its regulatory and planning capacities.
Strangely, instead of convening the experts to draw up a plan for quickly inducing investments in new generating capacity, the President will hold a summit of stakeholders in Mindanao. That summit will produce a lot of hot air; not electricity.
At any rate, having allowed two years to pass without inducing new investments in capacity, we are now two years behind the rising demand level. Plainly and simply, we are two years late.
Should the Energy Secretary resign because of this? I do not know, frankly.
Rene Almendras strikes me as a fairly competent guy. He heads a fairly competent agency. Yet the shortfall still happened. It could be a failure in business confidence: too few might be interested in putting in good money in a volatile place, sink good investments in a shifting policy environment.
The whole story about why we now again find ourselves with substantial power shortages has yet to be written. Perhaps the House or the Senate, in exercise of oversight functions, might organize a public hearing to find out what sequence of failure led us to where we are now. But the legislators are too busy trying to impeach the Chief Justice.
At any rate, the need for emergency powers at this time escapes me. We will need from five to seven years to build a baseload power plant. That is simply the time sound engineering requires. All the bidding, auditing and politicking preceding actual construction will probably lengthen the time required to bring new capacity online.
Meanwhile, the power shortage caps the capacity of the economy to grow. We cannot attract investments if we have no electricity. This is how available infrastructure limits growth.
We face a real power crisis that appears to worsen by the day. If the congressmen can demonstrate that emergency powers will arrest this crisis, then they should lay that out clearly before a mystified public. They should not just hint at a solution and then rush off to vacation.
Congress is now on a long break. Over the next six weeks, the matter of sorting out the power crisis is entirely in the hands of the Executive Branch — with or without emergency powers. Those enduring the brownouts will have no respite from an otherwise avoidable misery.