Power crisis now upon us

Department of Energy (DOE) Secretary Jericho Petilla could now tell naysayers: “I told you so.” In July last year, Petilla already warned about the projected power supply shortage in the early summer of 2015.

Based on this worst-case scenario, the DOE chief recommended to President Aquino to ask Congress to authorize him to declare a state of national emergency on the looming power crisis due to the very thin supply of electricity expected in 2015. Petilla alerted the public to brace for rotating brownouts in the summer of 2015 due to “very thin reserves” and delays in the operation of some upcoming new power plants.

The Energy chief underscored the urgency of this measure as necessary to avoid brownouts next year as some power plant projects or expansion plans may not push through as scheduled by summer.

The Senate and House committees on energy went through their respective versions on the proposed grant of special powers to the President as the two chambers differed on solutions to address the looming electricity supply crisis.

In November last year, the pro-administration allies in the House of Representatives delivered the requested passage of the Palace-certified emergency powers for the President. The House committee on energy approved Joint Resolution No. 21 that seeks to grant President Aquino emergency powers to address the looming power crisis in the country.

The Senate, on the other hand, has yet to pass on third and final reading the proposed measure as modified by Sen. Serge Osmeña III. With the Senate coming out with its own version, the measure will thus go through a bicameral conference committee to reconcile the differing provisions before being sent back to their respective chambers for approval.

The emergency powers, among other things, Petilla explained would allow the government, through the Power Sector Assets and Liabilities Management Corp. (PSALM) to contract additional power. Petilla was recommending additional capacity of up to 500 megawatts, instead of just 200 MW to provide a buffer in case the project deficit becomes bigger than 200 MW.

At the time, there were committed power projects slated to start in 2015, namely: the 87 MW Burgos wind scheduled to commence in February; 150 MW coal plant, an 18MW biomass facility in May; 10.8MW biomass, a 13.2MW hydropower plant in August; 67.5MW Pililia wind in September and a 100MW Avion plant in October.

Petilla, however, admitted there are also power projects that may not push through for one reason or another. Ideally, the DOE calculated as much as 400 to 500 MW of extra power supply must come on stream no later than April, 2015 to reach a “comfortable” level of reserve capacity that could kick in to prevent any wide power outages.

However, the Malampaya natural gas facility in offshore Palawan is scheduled for shut down from March 15 to April 14, 2015 to undergo preventive maintenance. This would consequently aggravate the power supply situation.

When Malampaya underwent preventive maintenance in 2013, several other power plants also shut down for similar maintenance reasons. This did not only cause power supply interruptions but also was also blamed for the spike in electricity prices that year. Based from DOE data, the occurrence of power outages in 2013 increased to 7.25 percent from 5.75 percent in 2012.

Subsequently in September last year, President Aquino formally asked the 16th Congress for emergency powers. Such powers would give him authority to enter into contracts to raise the generating capacity. Under such a state of national emergency, the President would have the power to address the shortage by contracting new power plants or renting modular generator sets, or gensets.

However, the recommended leasing scheme of gensets got shot down early on because it is nothing but a stopgap measure and not a long-term solution as gathered from the sentiments aired in several public hearings in Congress.

The House approved instead the DOE’s Interruptible Load Program (ILP) in partnership with the private sector and incentives to energy saving measures to decrease possible shortfall of supply as against demand for electricity.

Under ILP, large industrial and commercial establishments would disconnect from the grid and use their own generators during peak hours to free up power for use by households. The government, in turn, will reimburse firms participating in the ILP for fuel use and other operating costs, and their expenses will be exempted from value-added tax as an incentive.

The funds from the Malampaya gas project may be tapped as the estimated cost of the ILP should not exceed P200 million, which was far cheaper than leasing power barges – for as much as P12 billion – as what Malacañang had originally proposed.

With its request for special powers to address a looming crisis still pending in Congress, rotating brownouts have already started crippling provinces in Luzon and in Visayas for the past two weeks now. Even the DOE was caught by surprise why suddenly these power interruptions have been occurring one after the other this early. 

The DOE Secretary, in the meantime, has been lately very visible on government-paid infomercials between breaks on prime time television. Fortunately, a good-looking Petilla appears as the government spokesman in promoting tips to cut monthly electric bills through simple installation of energy-saving light bulbs to use of inverters for appliances that are major electricity-consuming equipment in households.

While the two chambers were still debating on this measure, Mr. Aquino reassured the public the government has been trying to fast-track the rehabilitation of the Malaya power plant to help augment power supply in Luzon and avert debilitating brownouts in 2015.

The government is now preparing to reactivate the 650-MW Malaya Thermal Power Plant Unit 1 in Rizal province. The newly rehabilitated Malaya power plant might be online by March instead of June or July. It was advanced in the light of these latest rotating brownouts until Congress finally passes the special powers for Mr. Aquino.

Once approved by both chambers, that’s the only time it will be sent to President Aquino for approval into law. But of course, the Palace would do its own vetting before this measure is signed into law. Despite the emergency nature of this bill, the feared power crisis is already upon us before it becomes a law.