‘Why rent power for 2 years when it’s needed only for 3 months?’

While the House of Representatives is ready to grant emergency powers to President Benigno Aquino III to deal with a looming power crisis next year, House Majority Leader Neptali Gonzales II on Wednesday asked Malacañang to justify the necessity of releasing public funds to pay for the lease of additional generating capacity.

Renting power from an outside source is one of the options presented by the Department of Energy to Aquino and Congress to address the power crisis expected to hit the country in the summer of 2015.

“Our problem is how do we justify this rental? They say we have to rent [the additional generating capacity] for a minimum of two years but we’d only need it for three months. Will it be right to ask the people to shoulder P6 billion for additional power you’d need for only three months next year? That’s a bit steep (Medyo mabigat ata ‘yun),” Gonzales said.

Aquino has asked Congress to grant him emergency powers to contract additional generating capacity to avert a potential power crisis next year, citing as basis Section 71 or the Electric Power Crisis Provision under Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA).

Oriental Mindoro Rep. Reynaldo Umali, chair of the House energy panel, said the government would spend some P6 billion to generate additional capacity for the Luzon grid since the minimum lease period for contracting companies was two years.

DOE Secretary Carlos Jericho Petilla said the government is eyeing sourcing the amount from the accumulated royalties from the Malampaya gas-to-power facility.

No price hike

Gonzales said Malacañang should specify the parameters of the emergency powers the President was seeking because it is difficult for the House to draft a joint resolution based solely on Aquino’s request.

“What we have received is a [formal] communication from the President but we don’t know what exactly he is asking for,” he said.

The Majority Leader said emergency powers that would be granted to Aquino should not result in higher electricity prices for consumers.

Gonzales said that while giving Aquino the authority to contract additional generating capacity was one of the options provided in the EPIRA for addressing a potential power shortfall, there were also other steps the government could take to increase power in the Luzon grid.

"Even without emergency powers, the government has the capacity through the DOE and ERC (Energy Regulatory Commission) to assess the situation," he said.

The Trade Union Congress of the Philippines-Nagkaisa (TUCP-Nagkaisa) has said it would support Aquino’s request for emergency powers on the condition that it would not drive up electricity rates.

“We insist that the DOE now present their tariff simulations and cost-impact scenarios to the public so we will know what to do,” said TUCP Executive Director Luis Corral said in a statement. — NB, GMA News

How much will emergency power cost electricity consumers?

What’s emergency power’s price tag?

Sen. Francis “Chiz” Escudero raised this question yesterday as he said Malacañang should be transparent enough to identify the cost taxpayers would bear if Congress approves the measure granting President Aquino emergency powers to address a looming energy crisis.

“What’s the cost to taxpayers of this measure? Even if power contracted by the government will eventually be sold to distributors, and thus the acquisition cost will be recouped, we still would like to know the costs involved,” Escudero said in a statement.

Escudero said the Executive department should come clean and disclose what additional costs consumers would carry.

“How will it be financed? Even if it’s an off-budget transaction, the government has the duty to publicly disclose the details,” the senator said.

“What is the burden of this to the consumers? Will it entail additional costs to us? If it’s through the electric bill of consumers then government should tell them in advance,” Escudero pointed out.

“We have to protect the Filipino people. We have to be careful. We have to be very careful on what type of powers we extend to them. We want to make sure what price will be. I am expecting an energy price of P15 per kilowatt hour (kwh) and this might reach P20 kwh,” said Sen. Sergio R. Osmeña III, Senate Committee on Energy.

P6-B TO ADDRESS POWER CRISIS

Oriental Mindoro Rep. Reynaldo Umali, House Committee on Energy chairman, said the government needs P6 billion to contract additional generating capacity to address the imminent power crisis in Luzon in the summer of 2015.

Umali said the P6 billion, which would likely be sourced out from Malampaya funds, would be used for the payment of the lease for a two-year period.

“If we lease it, we need a maximum amount of P1 billion per 100 megawatts per year. That’s the working figure we are looking at. So if we need to contract an additional generating capacity to address the projected 300-megawatt deficit, that would be P6 billion,” Umali told reporters during the weekly Ugnayan sa Batasan forum.

Escudero said that if the government will tap funds from the Malampaya natural gas project as fuel for the emergency powers, then it should publicly disclose how it would be done and the amount involved.

Escudero was referring to the government share with the Malampaya funds which will reach P34.5 billion next year, according to the 2015 national budget.

“If the government will tap funds from the Malampaya natural gas field as fuel for emergency powers, then it should tell us how it will be done and the amount involved,” Escudero said.

FORMAL REQUEST

In a letter dated September 12, 2014, President Aquino formally asked Congress to immediately enact the Joint Resolution that would allow his government to contract additional generating capacity to address the “imminent” power crisis in 2015.

The President’s request was signed by Executive Secretary Paquito N. Ochoa Jr.

“In accordance with Section 61 of Republic Act No. 9136, otherwise known as the ‘Electric Power Industry Reform Act of 2001,’ I hereby seek the immediate enactment of a Joint Resolution authorizing the President to establish additional generating capacity,” the President said in his letter to Congress.

“This authority is needed in order to address the imminent shortage of electric power for the summer of 2015 in Luzon,” he stressed.

But Senate President Franklin M. Drilon admitted that it would be impossible for the Upper Chamber to pass the Malacañang request before Congress goes on a three-week recess starting Sept. 26, considering the complicated issues and only four session days left.

“I think the Committee on Energy chaired by Senator Osmeña will meet Wednesday next week. Given all the complicated issues, we cannot rush this but we know the urgency. We will work on this,” Drilon added

‘CRITICAL ELECTRICITY SITUATION’

Aquino sought Congress approval in response to the Department of Energy’s (DOE) report and projection of a “critical electricity situation” in the summer of 2015 arising from, among others, the expected effects of the El Niño phenomenon, the 2015 Malampaya Turnaround, increased and continuing outages of power plants, and anticipated delays in the commissioning of committed power projects.

“There is no gainsaying that the imminent electric power shortage during these months is a real threat to the country’s growing economy and the general welfare of the people,” Aquino said.

“The speedy enactment of the Joint Resolution will ensure the energy requirements of the country for this critical period – through specific, focused and targeted acquisition of very tight energy supply,” the President added.

The President said he is looking forward to a “favorable response from both Houses.”

Umali said the House of Representatives will likely pass the resolution by October.

But before Congress grants the President’s request, Umali wants Energy Secretary Jericho Petilla to define the parameters as required under Section 61 of RA 9136.

“I asked my committee secretariat to draft a letter to Secretary Petilla to define what should be the basis for the issuance of the joint resolution…To sum it all up, what imminent power shortage are we experiencing? We need clear parameters before we craft the resolution. We may have call for a committee hearing on this,” Umali said.

Meanwhile, the Trade Union Congress of the Philippines (TUCP) urged Congress to approve the request of President Aquino for emergency power to address the looming power crisis.

TUCP Executive Director Luis Corral said this will give Aquino the leeway to implement solutions to ensure the country will have sufficient power supply. by Hannah L. Torregoza and Charissa M. Luci (With reports from Mario B. Casayuran and Samuel P. Medenilla) Manila Bulletin

Senators to Palace: Don’t rush us

ON GRANTING AQUINO EXTRA POWERS

CONGRESS is not likely to pass a joint resolution giving President Benigno Aquino 3rd special powers anytime soon because senators want to thoroughly study the matter first.

Sen. Sergio Osmena 3rd, who heads the Senate Committee on Energy, on Tuesday said the Senate will not grant extra powers to the President just because he said so or because the Department of Energy (DoE) recommended it.

“We all know what happened in 1992, so we have to be very careful about what type of powers we will extend to them,” Osmena noted, referring to the granting of special powers to then-President Fidel Ramos that led to high cost of electricity.

It was Energy Secretary Jericho Petilla, during a budget hearing of the Senate committee on finance, who informed the senators that Congress needs to pass a joint resolution giving Aquino emergency powers by the end of the month.

The President sent letters to the Senate and the House of Representatives on Monday requesting immediate enactment of the joint resolution authorizing him to establish additional generating capacity in accordance with Section 71 of the Electric Power Industry Reform Act of 2001 or the Epira law.

Section 71 of the Epira allows the President, upon determination of imminent shortage of supply of electricity and with joint approval of Congress, to search for additional generating capacity under approved terms and conditions.

Osmena said the executive should not rush Congress into enacting the resolution.

He recalled that he has been telling the Department of Energy (DOE) since 2011 about a looming power crisis but nobody listened to him.

He added that Petilla even said in May that the country will have no brownouts next year.

“Then they send a letter to us and they want it acted upon by the end of this month? No sir!” Osmena said.

The senator added that he wants the DOE to provide more details because based on his estimates, the establishment of additional generating capacity would hike power rates to P15 per kilowatt hour or even as high as P20 per kwh.

Senate President Franklin Drilon agreed that it is impossible to have the resolution approved by the end of September because the Senate has not been given the draft.

“We don’t know the parameters of the authority being requested. We know the urgency, but we can’t rush into this,” Drilon pointed out.
The Senate chief, however, gave assurances that the chamber will work as fast as it can but they cannot rush the enactment because the issue is complicated.

The Senate only has four sessions left before it goes on a three-week recess starting on September 27.

TUCP support

The Trade Union Congress of the Philippines-Nagkaisa (TUCP-Nagkaisa) also on Tuesday said it will support the grant of extra powers to the President as long as proposed solutiosn will not drive up electricity rates.

The group also called for a revamp at the Power Sector Assets and Liabilities Management Corp. (PSALM) and the Energy Regulatory Commission (ERC).

“TUCP-Nagkaisa will support the President but the solutions proposed should not punish workers and their families with an increase in power rates. We insist that the DOE now present their tariff simulations and cost-impact scenarios to the public so we will know what to do,” TUCP Executive Director Luis Corral said.

TUCP spokesman Alan Tanjusay said some of the solutions to the impending power shortage involve purchase of gas turbines and diesel-powered generation sets.

According to Tanjusay, the purchase of the turbines and sets will drive power rates up.

He accused PSALM of criminal negligence for not including in its budget the case of illegally terminated workers of the National Power Corp. - by JEFFERSON ANTIPORDA REPORTER Manila Times With JING VILLAMENTE

Noy to Congress: Give me emergency powers

President Aquino is greeted by European Council President Herman Van Rompuy

MANILA, Philippines - President Aquino has formally asked Congress for emergency powers that would enable him to address the projected electricity shortage next year.

Aquino made the request in a letter to Speaker Feliciano Belmonte Jr., a copy of which was furnished Senate President Franklin Drilon.

However, Drilon said it was impossible for the Senate to come up with the joint resolution by the end of September since Congress has only four plenary sessions left before it adjourns for a three-week break.

“We don’t even have the draft joint resolution. We don’t know the parameters of the authority being requested. We know the urgency, but we can’t rush into this,” he said.

The letter-request, dated Sept. 12, was included in the House order of business yesterday and sent to the rules committee chaired by Majority Leader Neptali Gonzales II.

“In accordance with Section 71 of Republic Act 9136, otherwise known as the Electric Power Industry Reform Act of 2001, I hereby seek the immediate enactment of a joint resolution authorizing the President to establish additional generating capacity,” Aquino said in his request.

He informed Belmonte and Drilon that the Department of Energy predicts a “critical electricity situation” in the summer of 2015 due to, among other factors, the expected effects of the El Niño phenomenon and delays in the start of operation of “committed power projects.”

“There is no gainsaying that the imminent electric power shortage during these months is a real threat to the country’s growing economy and the general welfare of the people.

“The speedy enactment of the joint resolution will ensure the energy requirements of the country for this critical period – through a specific, focused and targeted acquisition of additional generating capacities for use during the limited periods of time of very tight energy supply,” the President said.

“This authority is needed in order to address the imminent shortage of electric power for the summer of 2015 in Luzon. I look forward to a favorable response from both houses (of Congress),” he added.

Gonzales said they are reviewing the draft bill before referring it to the committee on energy. “We will attend to the President’s request with dispatch,” he said.

Cannot be rushed

Drilon said the Senate would work on the measure “as fast as we can,” but could not be rushed to approve it.

“I think the committee on energy chaired by Senator (Sergio) Osmeña will meet on Wednesday next week. Given all the complicated issues, we cannot rush into this but we know the urgency. We will work on this,” he said.

During the hearing on the proposed 2015 budget of the DOE yesterday, Drilon said the President’s letter was too “broad” and did not contain the parameters for the authority being requested from Congress.

Osmeña also echoed Drilon’s statement that the authority could not be granted to the President by the end of the month.

“I’ve been telling them we’ll have a shortage since 2011 and then now this is going to be my fault? It’s not accurate for them to depend on Senate approval before the end of September,” he said.

He said the Senate has a duty to protect the people from the possible adverse impacts of the grant of emergency powers to the President.

He cited the experience during the Ramos administration when several independent power producers were contracted to address the power crisis with a take or pay guarantee. This led to an overcapacity and the National Power Corp. accumulating a massive debt.

Cost to taxpayers

Sen. Francis Escudero said he wants to find out how much the government would incur and its cost to taxpayers.

“What’s the cost to taxpayers of this measure? Even if power contracted by the government will eventually be sold to distributors, and thus the acquisition cost will be recouped, we still would like to know the costs involved,” said Escudero, chairman of the Senate finance committee.

“How will it be financed? Even if it’s an off-budget transaction, the government has the duty to publicly disclose the details,” he added.

Only solution

Energy Secretary Carlos Jericho Petilla said he had raised the issue since July and would continue to push for the establishment of additional generation capacity as “the only solution… at this point.”

While there are other solutions for the expected power shortage next summer, he said there are no guarantees that these would materialize, and might even be more expensive.

Among the options is the Interruptible Load Program (ILP), which involves distribution utilities such as the Manila Electric Co. and electric cooperatives asking their big load customers to address their power requirements by using their own generator sets.

Petilla said private sector response to the ILP has been “dismal” and there is no guarantee it would materialize and address the power shortage.

He said the old Malaya geothermal power plant in Rizal, also among the options, has to be rehabilitated to be utilized.

Given the uncertainties with the other options, Petilla said contracting with power suppliers is presently the only real solution.

Suppliers’ requirement

He said the end-September deadline for the contracting of additional power was based on the requirement of the suppliers of a six-month period to be able to guarantee the necessary load.

“It’s absolute as far as the supplier is concerned,” he said.

With Congress saying that it cannot come out with the joint resolution this month, Petilla said he could settle for a supplier who could provide power requirements of the country in three months.

“But it will be expensive… I don’t think there is anybody who can supply in three months,” he said.

“There are alternatives but the question is, are we willing to pay for it. There are many alternatives, but our problem is time and cost constraints. What we have to consider is if we’re willing to have brownouts. It all depends on what we want,” he added.

Go slow

Militant party-list representatives and other members of the House minority bloc, however, cautioned Congress to go slow in the grant of emergency powers to avoid the anomalies that took place during the Ramos administration.

“We should not commit those mistakes again, like entering into a take-or-pay arrangement, which allows an investor to be fully paid for his generating capacity, whether that is used or not. We should pity the consumer, who will ultimately pay for our mistakes,” Isabela Rep. Rodolfo Albano III, a member of the minority, said.

He said Congress should impose strict parameters for the exercise of emergency powers.

He said Petilla should tell lawmakers his agency’s plans to increase generating capacity in Luzon for the middle of next year.

“Are they buying generators or are they renting? What do they exactly want to do? What are the details? Secretary Petilla should tell us because he will be the one who will be in charge of implementation. As of now, we are groping in the dark, we are guessing. ” he said.

Albano said Petilla should also verify his department’s data on “generating capacity, dependable capacity and demand” to clear up confusion.

“If his own figures for 2013 were to be believed, we even have excess electricity available in Luzon,” he said.

He cited the figures released by his minority colleague, Bayan Muna Rep. Neri Colmenares, and supplied by the DOE, that installed capacity for the Luzon grid is 12,790 megawatts, while dependable capacity is 11,469 MW.

The peak demand for the grid is just 8,700 MW, with Meralco using 6,121 MW.

“If these figures are correct, we will have enough electricity in Luzon next year, when a shortage is projected. Unless they are wrong,” Albano said.

TUCP backs bill

The Trade Union Congress of the Philippines (TUCP) expressed support for the grant of emergency powers for the President, but said he must also ensure that it will not lead to power rate hikes.

“We insist that the Department of Energy now present their tariff simulations and cost-impact scenarios to the public so we will know what to do,” TUCP executive director Luis Corral said.

The TUCP said the DOE’s proposals, such as gas turbines and diesel-powered generation sets, could lead to higher power rates.

“We have already advised DOE to do tariff simulations first because the power crisis cannot just be defined as a lack of power supply, it is also about uncompetitive power rates,” the DOE said in a statement.

“It is the consumers who are being punished for the failure to inspect defective meters in 125 distribution utilities by the ERC. And now the power industry wants to add to their profit by creating a power shortage which will allow them to charge more,” the TUCP statement added.

Doable plans

Militant labor group Partido ng Manggagawa (PM) called on Congress to ask the President to present doable plans to solve the looming power crisis before granting him emergency powers.

PM spokesman Wilson Fortaleza warned that palliative solutions to the power crisis would only bring more problems.

He said the Aquino government should be blamed for the power crisis for doing nothing since warnings were raised as early as 2010.

Fortaleza said lawmakers should also declare the EPIRA and privatization a failure and audit all the plants’ capacities before granting emergency powers to the President. – By Jess Diaz (The Philippine Star) With Mayen Jaymalin, Marvin Sy, Artemio Dumlao