LAWMAKER TO MALACANANG: WHAT IS EMERGENCY POWER’S PRICE TAG?

LAWMAKER TO MALACANANG:
WHAT IS EMERGENCY POWER’S PRICE TAG?

September 20, 2014

While Senator Chiz Escudero earlier said he will support initiatives to grant President Aquino emergency powers to address the looming power crisis, he asked Malacanang to “attach the price tag” to the emergency powers it is seeking from Congress so it can contract additional generating capacity in order to avert a power shortage in Luzon next year.

“What’s the cost to taxpayers of this measure?” Escudero, chairman of the senate finance committee asked, stressing that the powers the government is seeking is “basically the authority to enter into purchase agreements with private power producers.”

“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, chairman of the senate finance committee said.

“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 explained.

According to Escudero, all the more should disclosure be observed if the contracted power will be used for “peak demand” when electricity may not be dispatched to the grid but still paid for?

“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,” he said.

“Kung uutangin or i-a-advance muna ng national government or kung kukunin sa Malampaya royalty, dapat sabihin natin,” the senator added.

Escudero was referring to the government share of the Malampaya natural gas field which next year will reach P34.5 billion, according to 2015 National Budget.

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

He said a “powerful light” must shine on these contracts “in the interest of transparency and to prevent a repeat of the country’s experience during the energy crunch of 1990s when power contracted later burdened consumers.”

Escudero was referring to “stranded costs” in the billions of pesos which more than two decades after they were incurred are still being amortized by consumers through “universal charges “in their monthly electric bills.

In a speech in Quezon province last week, President Aquino announced he was seeking “joint congressional resolution” which would authorize the government to order additional generating capacity of around 600 megawatts.

The latter would be halved into two: 300 megawatts to meet the projected baseload deficit and 300 megawatts as buffer or equivalent to 4 percent of peak demand.

In a report to Congress, Energy officials forecast an energy shortage in Luzon at 400MW to 1,000MW during the first half of next year.

To plug this gap, his advisers have convinced the President to invoke Section 71 of the Electric Power Industry Reform Act (EPIRA) of 2001 which allows the government to “contract” additional generating capacity under terms and conditions Congress may approve.

EPIRA prohibits the government from constructing power plants. However, Section 71 of the law states that the President, upon determination of an imminent shortage of supply of electricity, may ask Congress for authority through a joint resolution, to establish additional generating capacity.

Escudero said he favors the grant of such power to the authority given the “bleak power outlook” next year.

The Department of Energy has warned that there will be some days of April and May 2015 when the power deficit will reach 300 megawatts.

This will be exacerbated by scheduled maintenance shutdown of the Malampaya natural gas facility in offshore Palawan from March 15 to April 14 next year.

Escudero said even if without maintenance issues “the fact is we need to commission more plants because any growth in the economy triggers a corresponding hike in electricity demand.” /
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