Throbbing headaches for the next Energy Secretary

Understand this. Our country’s total peak electricity demand is at approximately 13,963 megawatts versus approximately 18,283 MW available supply capacity as of May 20, according to the data from the National Grid Corp. of the Philippines.

Demand is expected to steadily increase as the population grows, the economy steadily recovers, and as things start getting back to normal after two years of a debilitating pandemic.

Aging power plants, coal still dominate

The supply in the main grid is dominated by coal power plants at 44 percent, followed by supply from natural gas power plants at 14 percent, and hydroelectric power plants at 13 percent, industry data show.

In off-grid areas, electricity supply comes mainly from oil-based power plants at 87 percent.

Among the power plants, 46 percent are 16 to 30 years old. To understand what this means, think of your car. As it is in cars, aging power plants can break down unexpectedly. This would mean longer planned maintenance days to ensure that plants can run efficiently.

Imported fuel

And then there’s the oil situation. Our electricity supply is dependent on imported fuel, and with international prices of coal and petroleum products skyrocketing due to the still ongoing Ukraine-Russian War, the situation is bleak.

With thinning reserves, one wonders why anyone would be willing to be appointed to the Energy portfolio.

For sure, it’s going to be stressful. Rotational blackouts aren’t farfetched scenarios, and if there will be no power interruptions, we will have to pay for higher cost of power. You can bet on it.

Didn’t presumptive president Ferdinand Marcos Jr. trumpet his “mission to provide enough affordable electricity for all”?

Republic of Marites has been churning out three names for the next Energy Secretary – Energy Regulatory Commission chair Agnes Devanadera; House Energy committee chair and Pampanga 2nd District Rep. Mikey Arroyo and incumbent Alfonso Cusi – all three are closely linked to former president and kingmaker Gloria Macapagal-Arroyo.

Agnes Devanadera

Of the three, I saw a glimpse of the plans of Devanadera if she gets appointed to the post. She is batting for the suspension of excise tax on coal and petroleum “In order to immediately implement an effective rate reduction during these abnormal times.”

On the generation rate, she said the current generation rate in the Meralco franchise area due to the increasing coal and fuel prices is at P5.8724 per kWh from P5.8623/kWh prior to implementation of the next excise tax rate under the TRAIN Law.

If the excise tax rate under the TRAIN Law will be temporarily suspended, the rate reduction that can be felt will be at P0.0101 per kWh, she said.

“For areas like missionary areas, which are considered the poorest of the poor, where 100 percent of its power supply is coming from diesel/bunker fired power plants, the impact of the excise tax pursuant to the TRAIN LAW is significant. It shows that the P1.50/kWh will be reduced in the generation rate if the P6 per liter excise tax is removed.”

She said a temporary and partial suspension of the generation rate – which accounts for approximately 50 percent of our electricity bills – can provide immediate economic relief. She proposes that the current VAT rate of 12 percent be reduced to six percent.

Supply mix

On the supply mix, Devanadera said the share of RE must be clear though gradual – 200 MW for 2023, 300 MW for 2024, 600 MW for 2025, 600 MW for 2026, and 1000 MW for 2027.

Nuclear energy

She is also in favor of nuclear power, saying the policy to include nuclear energy in our supply mix should be solidified.

Mikey Arroyo

I have not heard of Rep. Arroyo, but my research showed that he is likewise pushing for a reduction in electricity prices in the country. During the 18th Congress, the House Energy committee, which he chairs, has pushed for at least eight priority legislative measures in the energy sector.

Alfonso Cusi

As for Sec. Cusi, he is already preparing for the transition, so I really wonder why his name is still floating. He has said that a core policy to be forwarded to the next administration will be the ‘energy transition’ agenda under the updated Philippine Energy Plan of the Duterte administration.

This primarily calls for accelerated investments on RE and other clean energy sources.

Technocrat

I asked around and some of those in the private sector would like to see a technocrat appointed as energy chief, one who will not be weighed down by vested interests.

For sure, it’s a crucial post.

As the well-respected and competent former energy secretary Francisco Viray once said,

“Energy is the starting point of all industrial activities. The availability of electric power sets the wheels of business and industries in greater motion and in the process, stimulates economic growth and assures the public a better quality of life.”

The wisest choice should be someone who deeply understands the industry and has the political will to implement the right policies.

Only Marcos Jr. knows for sure who will be the next energy chief, but he needs to announce one soon to give enough time for a transition because the clock is ticking – just as swiftly as our power plants are aging and as oil prices are skyrocketing.

Iris Gonzales’ email address is [email protected].

Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com