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On power Red Alert

LKI 18th PRESS STATEMENT April 10, 2019                   


In light of the red alert issued today, the consumer group , Laban Konsyumer Inc. called for more urgency from ERC and DOE regarding plant outages and power situation. The group was alarmed by the Luzon grid being declared on red alert today, and that NGCP may implement Manual Load Dropping (MLD) in the following areas today, April 10 to maintain the integrity of the power system. The group expressed concern that this red alert and MLD will continue until such time that the available supply is lower than demand, especially at this time when several baseload power plants are on forced outage. 

As a result, parts of Metro Manila and Bataan  would be affected by the load dropping and would experience brownouts.

President Vic Dimagiba said urgently “it is my understanding that petitions are pending before the ERC and even the Court, notably baseload power plants that will add capacity to the system. They cannot keep dragging and slow-footing, and allow the system to collapse due to indecisiveness. ERC and the Court where these cases were filed, need to decide on the cases pending before them. ERC, in particular, has to step up now and decide whether to reject or approve the power plants that will provide the necessary power supply in these times of red alert, so we can avoid the same sutuation from happening in the future considering that no new plants are coming in. Generators are wary about investing in new power plants because of too much red tape and regulatory uncertainties. It is the ERC’s call whether they will approve or reject the power supply agreements but they have to decide now.”

He continued by saying “regulators cannot continue like this ignoring the important matters of their jobs. By their inaction and indecisiveness, they are simply adding to the problem that our country is enduring, a true power crisis, back to the circa of 1990s.  

The group suggested that “more capacity or supply should bring down power rates for consumers. If we do not address  this problem now, and start building new power plants today, distribution utilities will be forced to buy higher priced power from the spot market. If there is more supply, there is less pressure for rates to go higher, especially during the summer months.”

Dimagiba said “It would be best if the government could provide consumers a list of all the plants and an inventory of when these power plants scheduled shutdown .  There should be contingeny plans in place for unscheduled outages due to technical problems and /or force majeure . We observed  that there is where the problem occurs, when there is a sudden, simultaneous shutdown of power plants and the prices in the spot market go up.. 

Dimagiba wrote the ERC on January 27, 2019 and proposed that the Commission conducts the real time review of rate adjustments and inform the consumers that the adjustments are in compliance of the rate adjustment mechanism guidelines. 

The greater transparency and sharing of information to the consumers by the Commission is very important. We observed that the Manila Electric Company or Meralco conduct a monthly briefing on power rates , but we hardly hear the Commission,  the NGCP , the spot market operator and the generating plants inform consumers of their power rates.  We sincerely propose that the Commission introduce meaningful changes on ensuring the consumers right to accurate and timely information on matters relating to power rate.

Looking ahead,  Dimagiba  stated  that they are “highly concerned about distribution utilities that may have to source additional power leading to the summer months and midterm elections. Simultaneous, prolonged power plant outages, coupled with rising demand due to warmer temperature and election-related activities will lead to higher rates for power consumers. Power rates historically go up at the Wholesale Electricity Spot Market, the country’s trading floor of electricity, during summer months because of the tightness in supply. There needs to a watchdog on the WESM trading floor so as to ensure that prices are not competitive and reasonable.

The group pointed out that it was reported that “No less than President Rodrigo Duterte himself has signed a law that will allow power companies to apply for permits and pay fees online, as he continued to move against red tape, according to a copy of the measure released by his office. The Energy Virtual One-Stop Shop Act, signed on March 8, seeks to streamline the processing of documentary requirements and fees of local government units and various government offices. Duplications and redundancies in the documentary requirements will be removed and there will be unified forms, according to the measure. There will also be time frames for each agency to act on applications. An initial amount of P100 million from the appropriations of Department of Energy will be used to implement the law. LKI lauded the passage of the law, calling it a success against red tape but said ERC and DOE must walk the walk and not only talk the talk. They said that ERC focuses on issues like Fit-All and Universal Charge which increases power prices but fail to address more important matters such as power supply situation.