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LKI 19th Press Statement
April 25, 2019
CONSUMER GROUP CALLS ON ENERGY REGULATORS TO IMPOSE “PRICE CAPS” AT PRE- YELLOW AND RED ALERTS
In light of the yellow and red alerts issued these past weeks, the consumer group , Laban Konsyumer Inc. calls on ERC , DOE and the Market and System Operator to stay WESM prices at pre- yellow and red alerts.
The WESM Rules under Chapter 6 allow the Market Operator under certain conditions to implement market suspension and impose an “administrative price cap” to assure price behavior and subject to the approval of the ERC.
Based on the Weekly Summary Report of WESM for Week 14 and Week 15 , i.e . April 1 to 14, the hourly profile of load weighted average prices ( LWAP ) for Luzon ranges from a low of 4, 000 to a high of 38,000 pesos per mwh.
Surprisingly, the energy regulators are mum and have done nothing to use their powers under the WESM rules.
In a position paper submitted to the Senate Energy Committee ahead of the hearing set for April 25, 2019, President of LKI Atty. Vic Dimagiba said “the industry is fully aware that demand for power continues to grow in Luzon. Supply is not catching up. Not enough NEW power plants to meet growing demand and corresponding reserves.”
LKI said “because of this, consumers are now experiencing almost daily red alerts, a.k.a. rotating brownouts. The yellow and red alerts also cause spikes in prices, especially in the spot market. The committee must look into the bidding behavior before, during and after the yellow and red alerts to see who has been taking advantage of the supply deficiency at the expense and to the detrimentt of the consumers.
Dimagiba continued by saying “this is all at the expense of the consumers so for short-term, regulators should issue order to stay WESM prices at pre-red/yellow alert days. I also suggest and recommend that the regulators follow the money trail . Who are the suppliers that are taking advantage of the supply deficiency. Industry should be transparent. Consumers have the right to know what is happening to the grid.”
LKI highlighted that Sec. 76 of EPIRA or Republic Act No. 9136, mandates that the DOE shall undertake an education and information campaign to educate the end users on the power industry. Long-term, we need to build new capacity. New capacity will mean adequate supply and reliable electric service. New capacity will mean lower spot market prices.”
Dimagiba reasoned that “demand for power continues to grow in Luzon with growth from 2016 to 2018 surpassing the average for the last 5 years. However supply is not catching up. There are not enough power plants coming in just last year, new supply was at 1/3 less than the rise in demand. Almost 2/3 of baseload capacity in Luzon is more than 15 years old. Because of this, consumers are suffering from rotating brownouts. Red alerts and brownouts also cause price spikes, especially in the spot market.”
Dimagiba said urgently “it is my understanding that petitions are pending before the ERC, 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 has to step up now and decide now whether to reject or approve the power plants that will provide the necessary power supply in these times of red alert. It is their call whether they will approve or reject the power supply agreements but they have to decide now. Power industry investors should be allowed to move forward ”.
He continued by saying “regulators cannot continue like this ignoring the important matters of their jobs. By their inactivity and indecisiveness they are simply adding to the problem that our country is enduring, a true power crisis. When managers are good communicators,, that eases consumers’ reliefs. But ERC does not have that right now. They are not managing the power situation correctly, and they are also not communicating well. This goes the same for the Department of Energy. These two agencies are slacking off and we are the victims, as our country is going downhill in terms of power supply to meet the increasing demand.”
LKI also complained that “in fact, the Department of Energy had to open up and remove the gag order and inform consumers of doable things to do on red and yellow alerts. The fact that there was a gag order was already very alarming, and it should not be so. Consumers have the right to information and transparency from ERC and DOE, and a gag order is a direct offense to this an assault on our right to information, especially when it involves the power situation.”
The group said that “by the way, the interruptipble load program is a very expensive measure done to react to the yellow and red alerts that are plaguing us daily nowadays. ILP is very expensive since they use bunker and diesel for which excise taxes had been imposed. We cannot go on like this, resorting to ILP when there is yellow and red alert statuses being decalred. It is a stop-gap measure that is not a long-term solution. ERC and DOE must come up with more concreate ways of solving this power crisis and we believe that the one true answer is to put up more power plants now. It is an urgent matter that we cannot wait on any longer.”
The group had to actually ask and demand for daily updates on the status of power plants so that consumers can monitor the power situation of the grid on a daily basis. LKI President Vic Dimagiba highlighted the need for information regarding the white, yellow, and red alert statuses. The group said the time is now to act on the dwindling power supply situation and the need for more plants is more urgent than ever.
For any inquiries or concerns, you may reach LKI President Vic Dimagiba at 0917-812-5546. Visit our updated website at www.labankonsyumer.com