‘Department of Emergency’

 “Houston, we have a problem.”

 Finally, someone who looks and talks like Department of Energy (DOE) Secretary Carlos Jericho “Icot” Petilla candidly conceded the ongoing power supply shortage in the country is turning acute sooner than expected. This may turn for the worse unless there is a miracle that will result to dramatic increase in power supply at the soonest possible time.

 Per assessment of the DOE, Petilla disclosed there is a projected deficit of 200 megawatts (MW) of power supply in the summer of 2015. This early, Petilla warned, longer hours of power supply interruptions can be expected starting April or May next year. It is not clear, however, if the 200-MW shortfall is for the entire country.

As it is at present, Petilla confessed there is great likelihood the long hours of power outages now taking place in Metro Manila and in certain areas in Luzon will persist for the rest of the year. Given the very thin reserve in power capacity in the Luzon grid, any disturbance such as last week’s “Glenda” onslaught can cause severe power interruptions that we are still having in a number of areas hit by the latest typhoon. 

Actually, the rotating power interruptions from three to four hours started as early as two weeks ago following the scheduled shutdown for preventive maintenance of two major power plants servicing the Luzon grid. At first, the Manila Electric Co.(Meralco), the country’s biggest power distribution utility, implemented manual load dropping.

While repair of the damaged electricity poles and transmission lines was being undertaken, five to six hours of rotating power supply interruptions rendered many areas in Metro Manila in total darkness last week. As of this writing, a number of Meralco-serviced areas continue to suffer power fluctuation, if not interruption.

Outside the Luzon grid, Mindanao has been suffering acute power supply shortage that has been crippling operations of factories and other business concerns dependent on electricity.

Continuous electricity service is a must for industries and manufacturing establishments that operate 24/7 from factories to malls, and even media entities and service sector like hospitals and hotels. By the way, in my column last Monday, I inadvertently referred to Adam Laker, Sofitel Philippines general manager, as Adam Clark. Mea culpa.

Petilla revealed he initially discussed with President Benigno “Noy” Aquino III his recommendation to consider emergency powers to address the looming power crisis long before “Glenda” wreaked havoc on the Luzon grid.

Petilla got the impression President Aquino is keeping an open mind to his proposed emergency powers to address the projected shortfall in power supply. But reading the body language of P-Noy, Petilla noted, the Chief Executive seemed to be allergic to the term “emergency powers,” for obvious reasons. The last time the country experienced power crisis in the 1990s was during the last two years in office of P-Noy’s late mother, former President Corazon Aquino. “In our previous meeting, he’s (President) not against it. I just have to make a case about it and explore all options,” Petilla said. That was two weeks ago when the President instructed him to draw up all available options — with emergency powers perhaps as the last option, if I may add.

Petilla explained the decision is not solely the call of the Energy Department but the entire members of the Cabinet economic cluster. This is not just an energy problem, Petilla pointed out. A large part of the problem is financing, he added, citing the need to attract private sector to invest in putting up new base-load power plants.

As expected, the controversial proposal of the DOE Secretary invariably drew extreme reactions, those in favor and those against. Already, there were split opinions coming from concerned sectors like the independent power producers (IPPs) to members of the 16th Congress who have the final say whether to grant such emergency powers to P-Noy.

When former President Fidel V. Ramos took office at Malacañang in June 1992, he had to contend with the crippling blackouts all over the country. Pushing the economy to the status of newly industrialized country, the Ramos administration was stalled by debilitating blackouts that cut down production and so much downtime in economic activities.

Mr. Ramos was able to convince Congress to grant him emergency powers limited to one year within which, among other things, to secure contracts to build new base-load power plants. To entice private sector investors to put up such costly power plants, the Ramos administration provided for sovereign guarantee for loans contracted. It also allowed IPPs a guaranteed return on investment through a “take-for-pay” provision on their contracts.

In the end, we, electricity consumers had to bite the bullet. And we are still absorbing the “take-for-pay” provision of these IPP contracts. We continue to pay in our monthly bills any electricity supply even if we do not use it.

To ensure the continued profitability of these IPPs, the Electric Power Industry Reform Act of 2001 (EPIRA) prohibits the government from constructing power plants.

That’s why the Philippines has the highest power rate in this part of the world. Sadly, the present administration obviously has not learned any better.

However, Petilla cited Section 71 of EPIRA gives a way out of this tight situation. It allows the President, upon determination of an imminent shortage of supply of electricity, to ask Congress for authority through a joint resolution, to establish additional generating capacity under such terms and conditions as may be approved. 

Yesterday, the DOE Secretary disclosed he met with P-Noy to discuss the matter again. After their meeting, Petilla told reporters no decision was reached yet, citing they are still discussing all options.

But once a decision is made whether or not P-Noy will invoke emergency powers to avert power crisis projected by middle of next year, Petilla said it would be up to the Palace, not the DOE, to announce it. 

“We are not the Department of Everything,” Petilla wryly quipped. Yes, as it is turning out it has become the Department of Emergency.