A call for energy transparency

Atty. Hannah Viola, Energy and Infrastructure Fellow of the Stratbase ADR Institute and Convenor of CitizenWatch Philippines

Aside from the rising temperature brought about by the summer season and the heated debates of candidates in the May 2019 elections, another hot topic is the concern over the Philippine power supply situation.

From March 5 to 8, April 1 to 5, and quite recently on April 8, the Luzon grid plunged in and out of yellow alerts due to high forecasted system demand, forced and unplanned outages, and limited capability of power plants due to de-ration.

A yellow alert is issued by the National Grid Corporation of the Philippines (NGCP) when operating reserves drop below the required 647 MW contingency in Luzon, or equivalent to the largest unit in Luzon, which is the coal-fired power plant in Sual, Pangasinan. Meanwhile, a red alert is issued when the contingency reserve is zero or when a generation deficiency exists.

In the first half of 2019 alone, the Luzon grid already experienced almost ten (10) yellow alerts. Comparing this to previous years, we had only seven (7) instances of yellow alerts in 2018 and only three (3) during the same period in 2017.

In the eyes of the government, a yellow alert should not be cause for alarm and panic. While this is true, the consistency of yellow alerts in the eyes of the public, on the other hand, signals a thinning of supply reserves. More so if electricity demand is forecasted to reach its peak in the coming months.

Consumers cannot be left in the dark

Despite the assurance of the Department of Energy (DOE) that there is sufficient power supply, the current power situation reflects otherwise. Initially, the DOE wanted to do away with the public announcement of yellow alerts or the thinning of electricity reserves as it is allegedly one of the reasons for price fluctuations in the Wholesale Electricity Spot Market (WESM).

As a result, different consumer groups called for transparency during power alerts.

Consumer group CitizenWatch Philippines warned against the occurrence of tightness in power supply, particularly if the actual available supply remains below forecast amidst rising demand. It likewise raised the concern of price spikes and disruptions in productivity causing unnecessary discomforts to all Filipino consumers.

Laban Konsyumer, Inc. demanded disclosure and transparency from the market operator “to ensure competitive market behavior among spot market participants especially in periods of tight supply and to police the spot market participants against taking advantage of the tight supply on collusion in the spot market prices.”

For its part, InfraWatch stressed the urgency of addressing the power situation to avert a crisis similar to what happened in the water industry. Another group called Bantay Konsyumer, Kalsada, Kuryente (BK3) cautioned the public of a possible collusion in power generation resulting in low supply and high prices in the spot market, just like what happened in 2013.

With public clamor for transparency, thankfully the DOE responded immediately and published its first Yellow Report Monitoring on April 08, 2019.

Monitoring not enough, accountability needed

Government efforts to monitor the power demand and supply are commendable, but this is not enough. Accountability for power interruptions and outages should be in force. This especially holds true on the part of the generation companies as their generation charges comprise a large chunk of what consumers pay in their electricity bills.

No less than the EPIRA dictates its obligation, to wit: Generation of electric power shall be competitive and open. This provision entails that abuse of market power and its anti-competitive behavior should always be observed.

This obligation is underscored now more than ever as electricity rates are set to increase this month. This price hike is attributable to higher charges from the Wholesale Electricity Spot Market from the tight supply in the Luzon grid and the weakening of the peso against US dollar.

In a DOE press conference last week, the Independent Electricity Market Operator of the Philippines (IEMOP) explained the correlation of prices and supply considering that there is pressure on electricity prices in the spot market if there is a reduction in reserves.

Moreover, the interruptible load program (ILP) was discussed as a measure in averting power shortage anticipated during the summer months. Under the ILP, distribution utilities and participating customers enter into an agreement for voluntary full or partial de-loading or reducing the amount of load connected to the distribution grid during the peak hours of the day.

Having a stable supply of power is a matter that is imbued with public interest and general welfare. As the confidence of electricity consumers and the integrity of the electricity market largely depend on the transparency of data, measures should be made to ensure transparency through an energy platform.

Through this platform, the public is informed, in an efficient and timely manner, about the power plants which are on forced or unplanned outages along with its corresponding reasons.

 

 

This article was originally published in BusinessWorld.

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