Cheaper

We will still suffer rotating brownouts this summer, the result of the chaos in planning and management of our energy sector. As a consolation, however, we might not have to pay for last December’s hefty increases in electricity prices.

It is too late to beef up our power reserves. It takes at least five years for new energy projects to finally come online. The Department of Energy did not do enough the past few years to encourage enough investments in power generation. Our economy will simply suffer the consequences of bureaucratic incompetence.

On the minor matter of last December’s price spikes, however, the Energy Regulatory Commission (ERC) eventually found a way to correct what is evidently a case of market failure.

Last week, the ERC issued a ruling administering pricing at the Wholesale Electricity Spot Market (WESM). The regulatory body set load weighted average prices (LWAP) at between P6 to P7 per kilowatt hour for November and December last year.

The price spikes reflected in our bills for the period was due to an abnormal increase in generation charges to P15.523 per kilowatt hour for November and P17.749 per kilowatt hour for December. That abnormal pricing produced windfall profits for independent power producers that took advantage of market confusion resulting from the closure of power plants using gas from Malampaya.

Gas supplier Malampaya was closed for scheduled maintenance work. Despite a year’s notice of the maintenance shutdown, government bureaucrats did nothing to mitigate a possible power shortage — specifically by running (at a loss) the bunker-fuel Malaya plant.

The ERC should have implemented the administratively defined price range contained in the recent ruling as early as November last year to avert price volatility at the WESM. That might have spared all of us all the aggravation and confusion. At any rate, it is better late than never.

Meralco actually suggested an administratively-defined price range last year, anticipating the closure of the gas plants. The ERC, however, did not act promptly on that recommendation, preferring to let market forces work their way through the WESM. Even the Palace, last year, laid back and took the position that nothing could be done about spot market pricing. Now we know better.

The power distributor, which took the brunt of consumer outrage the past few months although it was just effectively the collecting agent for the power producers, strongly supported the recent ERC decision.  Meralco saw this as being in line with its own effort to determine the true and reasonable cost of power.

By directing the WESM to reduce November and December power costs, the ERC took a fair and pro-consumer position. The regulatory body’s reason for being is precisely to protect consumers first and foremost from unreasonable price fluctuations — in the last instance, price volatility resulting from market confusion and injurious to consumer interests.

As an outcome of the ERC’s decision to administratively define the price range for November and December, Meralco announced electricity bills will be reduced beginning this month. The initial reduction will be P0.45 per kilowatt hour and will continue until all the billing confusion resulting from the Supreme Court’s TRO on the power rate hike is eventually cleared out.

Lower electricity prices is, in turn, the outcome of several recent developments. The peso has firmed up after sliding the past few months. Power supply has normalized with the return of the gas plants. Apart from reduced generation costs, there has been reductions in the systems-loss charge and the universal charges.

The rotating brownouts might be unavoidable, but there should be some consolation in the fact that we are not paying unreasonably high power rates the next few months.

Incompetent

Incompetence in the face of calamity is not uniquely Filipino after all.

Mar Roxas, whose handling of the Zamboanga and Tacloban crises became the butt of jokes, might find perverse consolation in the fact that Malaysian officials are behaving like absolute fools in handling the case of the missing plane. Kuala Lumpur has earned nearly universal condemnation for its handling of this tragedy.

In the first few days, there seemed to be a breakdown in coordination between civilian bureaucrats and the Malaysian military. It was so bad that, at one point, Vietnam scaled down its search effort because it sensed Kuala Lumpur was not sharing information promptly.

Over the weekend, Chinese state media joined the chorus condemning Malaysian incompetence. Families of the victims are angry and frustrated. The whole world is mystified over the bizarre disappearance of a large plane with state-of-the-art communications equipment.

To be fair to the Malaysian officials, however, this case of the missing Flight MH370 is truly mind-boggling. It appears that whoever was in control of the cockpit turned off the plane’s transponders even before it delivered its last, reassuring message to air traffic controllers.

The best evidence available from a plane that appears to have deliberately turned off its communications devices is that MH370 took a sharp turn from its designated route. The last satellite contact puts the plane over the Indian Ocean, not the South China Sea. That simply multiplies the area or search a hundred-fold.

As each painful day passes, the possibility grows larger that we might never find this plane at all. The militaries of many nations, along that long arc from Kazakhstan to Australia, are now pressed into service looking for a plane in the world’s most desolate areas.

Well over a week since it disappeared mysteriously, there are more questions than when this gripping drama began. Be kinder to the Malaysians: no one could effectively manage a calamity as mysterious as this one.