POSTSCRIPT / April 15, 2012 / Sunday


Philippine STAR Columnist

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Goal of power summit was to sell higher rates?

READY REMEDY: It appears that when President Noynoy Aquino flew to Davao this week ostensibly to draw up through dialogue a solution to Mindanao’s electricity crisis, he was already bringing with him a ready-made remedy.

What he apparently wanted to do was to convince Mindanaoans to accept a situation over which they have no control anyway. He wanted them to swallow the bitter pill of higher-priced electricity to be generated and distributed by an entrenched power cartel.

The Mindanao power crisis did not pop up unannounced one hot summer day. There had been a buildup of data pointing to a looming emergency, but its implications were not discerned nor acted upon by the Palace whiz kids.

Malacañang’s odd handling of the situation has given rise to suspicion that the Mindanao crisis was allowed to deteriorate to justify power oligarchs’ descending on the darkened scene bearing adequate, though costly, electricity.

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VARIOUS VOICES: For better appreciation of the real problem, listen to various voices. The Freedom from Debt Coalition, for instance, focused on what it called “the Mindanao Power Drama to privatize Agus-Pulangi, increase power rates and introduce dirty energy-sourced electricity.”

The FDC said the problem is rooted in the Electric Power Industry Reform Act (EPIRA), in policy direction, and the quality of planning and management. It added that EPIRA was “designed for big business interests, not for public service.” It said EPIRA should have retained for the state the role of generating electricity and developing transmission lines.

It deplored that developing electric power supply and managing it “has been left at the mercy of the private sector, an oligopoly of a few big, long-entrenched family/corporate interests.”

As basis for master planning, the FDC suggested the sharing of the technical audit results of all generators as well as data on base-load requirements, mid-range and peaking capacity, and actual demand.

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SOLUTIONS: The FDC said that vested cartels are positioning themselves to corner a huge share of the electricity market by allowing the decay of power plants and the use of “highly polluting fossil-fueled power plants that will also virtually guarantee long-term high electricity prices, since contracts will remain pegged to the volatile oil market.”

It proposed the immediate upgrading of the Agus-Pulangi hydroelectric generators. For medium-term solutions, the FDC proposed the implementation of the Balo-i Plains flood control project, the resolution of the technical problem of Agus 7 and the development of 240-megawatt Agus 3.

Another group, the Greenpeace Southeast Asia, noted that when President Aquino was given proposals to solve the power crisis, none of those that came from Mindanaoans was for coal, because they want sustainable, price-stable sources that only renewable energy can provide.

The group said, “We expect the President to do the right thing by pushing for the rapid deployment of clean, renewable energy and canceling all coal proposals which the DoE says are already in the pipeline. The pro-coal agenda of the DoE in Mindanao has to be reversed.”

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CARTEL BLAMED: The Trade Union Congress Party was blunter in laying the blame, saying that “the cause of the crisis – present and near future – is a power cartel.”

It named six influential families who allegedly “have carved up specific areas so that all three island grids are now in thrall of an electricity monopsony.”

The TUCP said the real question that should be posed is: “Why has government compromised national energy policy and national energy security to the few?” Ten years after EPIRA was supposed to bring in private players with deep pockets to invest in needed capacity, there is now a looming undercapacity.

“With most Napocor assets in private hands, competition was expected to drive down rates, but instead there are threats of brownouts and the endless upward spiraling of electricity rates. Instead, the oligarchs and their friends would have us believe that it is the fault of Mindanao for trying to hold on to its policy regime of cheap hydropower.”

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MINDANAO SPOILED?: The TUCP said: “Now we would have their agents and apologists in high places add to the disinformation by blaming the Mindanaoans’ being ‘spoiled’ and saying they should now bite the bullet.

“Unfortunately, contrary to the best intentions of the Mindanao Development Authority, the DoE would have the Mindanao power summit transformed into a footmark in history to sweep the truth under the rug.

“By coming up with the grand plan of forcing electric cooperatives to buy expensive diesel power from power barges, the DoE would want the summit to legitimize the de facto power of oligarchs to control our access to power and its resultant costs.

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RATE OF RETURNS: “High officials are saying let us stop holding people to account for the brownouts. Somehow they miss the point that you cannot provide a technical answer (power barge-provided electricity) to a political question (the cartelization of the power industry).

“If the Energy Secretary does not have the will to do it, the President can order the Energy Regulatory Commission to reform the rate-making formula known as performance-based ratemaking so as to moderate the overly generous rates of return that the cartel is allowed.”

The TUCP said some generating corporations are making over 50-percent return on rate base and siphoning their earnings to stock dispersal, dividends, bonuses, foreign expansion or diversification instead of investing in additional capacity.

It lamented that the rate of return is based not on the investment cost of the plant but on the replacement cost which may be twice or thrice that of the original cost of the plant.

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(First published in the Philippine STAR of April 15, 2012)

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