Inaction may lead to power crisis in 2 years — Angara

MINDANAO SUPPLY SHORTAGE SEEN SPREADING TO LUZON

A bigger power crisis that will spread from Mindanao to Luzon is expected within two years if the Aquino administration continues to vacillate on the needed policies to meet rising power demand, Sen. Edgardo Angara yesterday said.

Reserve power supply in Luzon can still meet the rising demand but only until the next two years, Angara said, as he expressed concern over the possibility of the Mindanao power crisis spilling to other regions.

“If nothing is done, the crippling power crisis being experienced in Mindanao could shift to Luzon in two years. It’s a rolling crisis,” the senator said, noting reports on power supply problems projected as well in the Visayas region.

“If nothing is done, the demand will outspace energy supply,” Angara said as he urged the Executive to expediate measures to oversee the full implementation of the Renewable Energy law.

Former Sen. Juan Miguel Zubiri also warned of potential job losses as a result

of the persistent two-to four-hour daily brownouts in many parts of Mindanao.

“National agencies should find ways to help distressed economic sectors cope with the constant brownouts,” Zubiri said.

“The Department of Labor and Employment in particular should ensure that the feared dislocation of workers is minimized,” he said.

Citing National Grid Corp. of the Philippines (NGCP) data, Zubiri said that as of March 29, Mindanao had a power supply deficit of 187 megawatts (MW), or roughly 15 percent of peak system demand.

The power-intensive industries hurt by the recurring brownouts include food processing and canning; rice, corn and coconut milling; construction; metal die casting; and the manufacture of steel, chemicals, cement and paper, Zubiri said.

While local industries are looking to expand and foreign investors are set to come in, demand for electricity is expected to keep rising, Angara pointed out.

“The reserve power supply in Luzon can still meet rising demand for two years, although we are not also sure about that. But in Mindanao and the Visayas definitely there is a shortage,” he said.

The situation calls for immediate action and government should waste no time in managing the power supply deficit to avert rolling brownouts in Mindanao where no new power plants were put up in the past years to anticipate the problem.

Such inaction somehow led to the the shortage crisis in Mindanao and it would not have been the situation had the government implemented the Renewable Energy Law four years ago “when there was $5 billion worth of investments in RE and $1 billion was ready to be put up for hydro, bio gas and solar power,” Angara said.

He said the government, however, took too long to adopt the so-called feed-in tariff scheme which would have helped provide stable power prices through long-term contracts with RE investors where generation tariff (FIT rates) is paid for every kilowatt-hour produced. Its proponents cited FIT rates in the Europe, for instance, which provide guaranteed grid access with long-term (15-25 years) contracts for produced power and purchase prices are based on cost of generation of RE plants.

“But RE investors would not come in if they don’t know how much would be the price of the energy they would generate from RE plants but the Department of Energy (DoE) panicked about the potential taxes that will be lost,” he said.

“If not for this combination of shortsightedness and slowness of the bureaucracy, we would not be having this supply problem,” he added.

Unfortunately, he said the prospective RE investors have opted to move to Indonesia and Thailand there was no assured rates of return as provided under the FIT rate scheme.

“It’s a pity, because the $1 billion investment on RE plants from Europe was already set to come in. if that happened, we would not be too dependent on the volatile Middle East oil supply situation,” Angara said.

The senator also pointed out that substantial investments in RE projects would have provided the power supply buffer and the Philippines would not be heavily reliant on expensive imported oil supply to run existing power generation plants.

Still, he said the Aquino administration, particularly Energy Secretary Jose Rene Almendras, is not solely to blame because the problem has been pestering long before President Aquino came to power in 2010.

Angara also commended Almendras for his “vision and boldness” but slammed the Department of Finance for its narrow minded view for worrying only about government revenue from energy investors without considering the urgency of the power supply situation.

In the current Mindanao supply problem, shopping malls and other commercial buildings that rely heavily on ventilation and cooling have also been affected, according to Zubiri.

“Agricultural plantations and fishing operations that depend on mechanization and cold-storage have likewise been dampened down,” Zubiri said.

Even the petroleum and water industries have been impaired, since they depend on electricity to drive pumping operations, he pointed out.

“In fact, in some communities, access to household, irrigation and industrial water has been reduced due to the brownouts,” he added.

Zubiri said he was not worried about mining companies, which have their own power stations to service their electricity requirements.

The DoE previously said it does not expect a permanent solution to Mindanao’s power shortage until some 258 MWs of additional generating capacity are installed by 2014.

Zubiri earlier warned of “catastrophic” brownouts in Mindanao lasting up to eight hours daily by April, due to higher demand for electricity associated with the summer season.  –Angie M. Rosales, Daily Tribune