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Wednesday, March 18, 2015

The Other purpose of the emergency power


By Rod Kapunan
President Benigno Simeon Aquino is seeking an emergency power from Congress to cope up with the expected shortfall in the supply of electricity in the coming months, which will coincide with the onset of the El Niño phenomena.  It is forecast that between 400 to 1,000 megawatts additional electricity are needed, particularly in the Luzon grid, to avert a four- to seven-hour daily brownout.   PNoy attributes the shortage to boom in the economy triggering an increase in demand for more electricity and the scheduled maintenance work to be carried out at the Malampaya natural gas facilities that accordingly, supply us a total of 2,700 megawatts. 
He said an emergency power is warranted because Section 71 of Republic Act 9136, otherwise known as the “Electricity Power Industry Reform Act of 2001” prohibits the government from constructing or engaging in power generation.     Given the premise, one could easily draw the kind of logic that is in the mind of our congressmen principally headed by Speaker Feliciano “Sonny” Belmonte, Jr.   Logically, when they incorporated that stupid provision, the oligarchs in this power industry assumed and guaranteed there would be no shortfall in the supply of electricity.  They cannot get away from that responsibility because they totally disallowed the government from pegging their rates.    
Now to solve the problem they created, they would like to give PNoy the authority to establish additional generation plants under the terms and conditions that Congress may approve or rent one but only to sell them after being built.    According to Congressman Reynaldo Umali, P6 billion will be needed for the construction of the generation plant that could produce 300 megawatts, which is exclusive of fuel.   It is just for the cost of construction.  He added that for every 100 megawatts, it will cost the government P1 billion, and the minimum lease is for two years.   Should it decide to lease one, it would cost the government one billion pesos for every 100 megawatts.      
The people are skeptic, for aside from being illogical and stupid, the power that will be given to PNoy is clearly to make a run-around of the stupid provision.   Remember, they even sought to dispose of the National Power Corporation and all of its assets by creating the Power Sector Assets and Liability Management Corporation (PSALM) pointing the blame on government competition as a hindrance to their expansion, viz. investment.  To impress us, they have their promise incorporated in the law, to quote in Section 2, (b)   of R.A. No. 9136: “To ensure quality, reliability, security and affordability in the supply of electric power.” 
Nobody is against the grant of emergency power if its use is for the good of the people.  As his Presidential Spokesman Edwin Lacierda, would put it, “The most expensive power is no power.” But the power crisis that looms was of their own making, and now makes their vile threat that our failure to solve the problem could stultify the alleged “economic boom” we are experiencing.   Others have their reservation much the emergency powers could mean that everything will be made under a negotiated contract to award the construction to the cronies of this pretending-to-be-honest government.   
Right now, the average cost per kilowatt hour for consumers is at P11.25.  If we are to believe what Senator  Sergio Osmeña III is saying, that the  price per kilowatt hour will be as high as P15/kwh, or it could raise to P20/kwh, that would mean a 33 to 78 percent increase in the monthly electric  bills.  In which case, that would be self-defeating because even if we have an adequate supply of electricity, investors could not easily be lured into putting their eggs into one basket because they have other economic consideration, which is primarily focused on how to bring down the cost of production.  If cannot be done and we might as well kiss goodbye to all our hopes to economic development. 
The same is true to the Interruptible Load Program (ILP) where on a voluntary basis, big businesses such as malls and factories that have their own generators can be disconnected from the power grid in times of short supply, and can sell their excess power to distribution utilities.  Like the proposal to create or rent additional power plants, the ILP is not without a cost to the taxpayers.   Senator Osmeña said he would support the move if PNoy is authorized to use the P1 billion Malampaya gas royalty fund to support the idea.  He said, it is a better option than establishing an additional generating plant. 
Others insist that the Malampaya royalty funds should not be used to pay the factories and malls that will join the ILP much that they can get back their reimbursement from the distribution utilities for the same cost per kilowatt hour that generators can produce. They argue that the Malampaya royalty funds can be used to finance worthwhile projects designed to generate employment or provide additional economic assistance to the 25.2 percent of our people who are living below the poverty level.  
His other proposal is that the additional four centavos per kilowatt hour increase in the cost of electricity will have to be paid by the consumers.  Many likewise oppose the proposal for while we exhort our people to sacrifice, we reward the participants of the ILP to collect from their otherwise excess generation. Besides, the PNoy could exercise his power to protect the consuming public without necessarily burdening the participants of the ILP that in truth can get their refund from the distribution utilities.  This the President can do by the exercise of his police power.  
Finally, while other countries equally grant their power industry sector the blanket authority to take charge in the electrification program, including the right to fix their rate as what we did to defang the Energy Regulatory Commission (ERC), said authority goes with some responsibility.  The problem is that they failed to digress that the doctrine of laissez-faire has its corresponding obligation and commitment to the consumers.  It is on this equation why some are urging that the demigod in our present era be punished by fine, or be suspended from operating their power plant,  or even have their power plants nationalized for their failure to live up with the promise under the law.  
They must bear it in mind that the franchise accorded to them is a guarantee that the government will protect them from any undue competition in exchange for that they demanded.  Sad to say, they failed to fulfill their part of the bargain.   One need not even write this into law.  All that is needed is a simple common sense to understand what it means.  In our case, after being made a sucker, like a scum from hell, they come back begging for more money and more guarantee to their investment if they are to fulfill anew their promise.   
Maybe it is high time for us to think whether to cling on to that stupid law or to scrap it altogether to achieve the real economic prosperity we have long been waiting for. 

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