‘No power rate hike if Aquino uses Malampaya fund’

MANILA, Philippines – Consumers would be spared from energy rate adjustments if the President, once authorized by Congress, will use the multi-billion-peso Malampaya fund to avert the looming power crisis in the summer, the energy chief said.

“People will spend nothing…in case we are going to use the Malampaya fund,” Energy Secretary Carlos Jericho Petilla said in an interview with DZMM on Monday, October 6.

Petilla earlier vowed to ask President Benigno Aquino III to certify as urgent a bill expanding the use of the Malampaya fund, which consists of the proceeds from the natural gas operations off the shores of Palawan and over which the President has discretion.

Filed by Senator Antonio Trillanes IV last December 19, the bill seeks to authorize government to use the Malamapaya fund “to directly subsidize energy consumption of end-users in case of market failure.” 

It was introduced in the Senate after a Supreme Court decision that barred the President from using the Malampaya fund for projects other than those related to energy development and exploitation. (READ: SC stops release of PDAF, Malampaya funds)

“If the energy [cost adjustments] in 2015 would be charged to the people, for sure they will be appalled. But if we make the electricity free, they might also wish that there would always be a crisis,” he said.

To maintain a fair compromise, Petilla said, the DOE is simulating how much consumers should be charged in case government decides to subsidize the generation costs in summer based on the market price of energy.

“So, in other words, the amount that they will be charged won’t be far from how much they’re currently billed in 2014,” he said in Filipino.

Government estimates that the power deficit next year would hover at 300 megawatts (MW), which will cost about $20 billion per 100 MW. Petilla said the DOE is in charge of how the contracted capacity would be funded.

One of its options is to consider the use of the Malampaya fund, although National Treasurer Rosalia de Leon said in October 2013 that the P137-billion ($3.076 billion)* Malampaya fund has run out of cash – and an appropriation is needed if DOE requests to use a portion of it. (READ: How the Malampaya fund was plundered)

The energy secretary has been looking for measures to avert the power crisis in 2015. In September, they tapped at least 30 establishments in Metro Manila to join the voluntary inteterruptible load program (ILP). The combined additional capacity of these establishments reached 165.8 MW, but due to their voluntary nature, Petilla said they could not fully count on the ILP.

“Establishments won’t give it all because it depends on their business needs. They’re not meant to run on a period of time. If longer, they will have issues on maintenance,” he said.

To make things worse, the DOE has been struggling to count on commitments from private sector that have promised to provide additional generating capacity to the Luzon grid.

For instance, the power generation arm of DMCI Holdings, which earlier estimated to activate its 150 MW Calaca coal fired power plant, said it would postpone the plant from going online in summer 2015.

Petilla said DMCI informed DOE through a letter last week that the company’s target of operating the power plant would to be pushed to June 2015.

“There was no specific reason, but we asked them to explain. My suspicion is their EPC (Engineering, Procurement, Construction) contractor is simply delayed due to technical problem,” said Petilla.

Their last resort to solve the power crisis, said Petilla, would be for Aquino to declare a power emergency, invoking his powers under the Electric Power Industry Reform Act (EPIRA) of 2001, which critics have opposed.

“The problem with the Aquino administration, after 4 years, there is no clear long-term energy development plan. What it is doing now is just to stack the odds against the consumers as its bias is to ensure the profits of the big energy players,” Bayan Muna Representative Carlos Isagani Zarate told Rappler.

Clarifying allegations, Petilla said the presidential authority under the EPIRA only means that the highest executive official will have liberty to contract additional power supply without going through Congress. – Mick Basa/Rappler.com

*US$1 = P44.53