MAP says emergency powers to address looming power crisis

MANILA, Philippines – The energy committee chair of the Management Association of the Philippines (MAP) wants other business groups to support the implementation of Section 71 of the Electric Power Industry Reform Act (EPIRA), albeit on “limited” basis, to address the looming power crisis in summer 2015.

A power supply shortage of about 300-500 megawatt (MW) by summer of 2015 is imminent. This shortage will be compounded by the maintenance shutdown of the Malampaya gas field, which will reduce the Ilijan power plant’s capacity from 1,200 megawatt (MW) to 450 MW.

“A limited implementation of Section 71 will further enhance or ensure that there will be enough power during summer of 2015. Therefore, we encourage the other groups to reconsider their position on Section 71,” said Ernesto Pantangco.

Section 71 of EPIRA states that the President, upon determination of a shortage of supply of electricity, may ask for Congress for authority through a joint resolution, to establish additional generating capacity under such terms and conditions may approve.

Pantangco said a limited implementation of Section 71 would dispel worries of a possible abuse should President Benigno Aquino III declare a power emergency. (READ: Power emergency: What it means)

‘Limited implementation’ defined

For MAP, a limited implementation of Section 71 means that the government could be allowed to contract additional generating capacity of up to a maximum of 300 MW for a period of two years only.

To monitor the implementation of Section 71, MAP suggested the creation of a 5-member committee, composed of designated representatives of knowledgeable business groups.

MAP also supports the voluntary implementation of the Interruptible Load Program (ILP) in which participating companies with private gen sets are compensated for their fuel and other variable costs.

But since ILP is voluntary, MAP said government should be allowed to contract additional generating capacity.

MAP also reiterated that there is no need for the government to amend EPIRA.

“… We wish to reiterate MAP’s previous position that the EPIRA should not be amended at this point in time as it would not solve the country’s most pressing concern which is [the] lack of power supply. Some proposed changes can be made by amending the EPIRA implementing rules and regulations, but amending the law itself would only introduce uncertainty into the regulatory regime of the power industry. International and local investors and financial institutions would not invest in an industry where the rules are not known and stable,” the group said.

Pantangco said the American Chamber of Commerce of the Philippines Inc. is supporting MAP’s recommendation of a limited implementation of Section 71.

However, the Philippine Chamber of Commerce and Industry (PCCI) and the Makati Business Club (MBC) are not supporting this because they are convinced that the government should be completely out of the power generation business.

“The moment this starts, what’s preventing this from happening again? That’s what they are worried about,” Pantangco said.

Sourcing additional power capacity

And with the controversies hounding the executive branch on the Disbursement Acceleration Program (DAP), many are worried that there could be abuse of power.

In order to contract additional capacity, the government will have to pay the power generators for the power that will be leased from them. The payment is estimated to reach $18 to $20 million per year for every 100 MW, according to Energy Secretary Carlos Jericho Petilla.

The energy chief had said that partial funding may be sourced from the Malampaya fund, which was earlier linked to the Priority Development Assistance Fund scam.

“Only in the event that there is no guarantee that the foregoing measures would adequately address the impending shortage should government be allowed to contract additional generating capacity under Section 71 of the EPIRA,” added Pantangco.

Former President Fidel Ramos exercised emergency powers during his term in order to buy more capacity, but on a take or pay basis. This led to higher power rates because consumers had to pay for electricity that was not consumed. – Rappler.com