May 15, 2019
IN a recent editorial, we suggested that the annual recurrence of electricity shortages with the onset of hot weather in Luzon was highly unlikely to be a coincidence, and that the Energy Regulatory Commission (ERC) must take a careful, serious look at allegations that the shortages were intentionally designed to raise electricity rates.
In response to this and similar concerns expressed by others, the ERC in a roundtable discussion last Friday offered further insights into the issue.
The ERC deserves some credit for making the effort to explain the situation from its perspective. The power industry is a complicated, highly technical subject that is difficult to understand for anyone who is not an expert, and yet it has a tangible day-to-day impact on virtually everyone. The ERC in years past has not always met satisfactorily its responsibility to provide timely and comprehensible information to the public, and its willingness to do so under its current leadership is a welcome development.
What the ERC had to say about the recent power shortages, however, was as alarming as it was reassuring that it took the time to say it.
Prior to Friday’s roundtable discussion, ERC Commissioner Catherine Maceda said that the regulatory agency was still waiting for the reports from the generation companies explaining the rash of plant shutdowns that reduced electricity supply between March 5 and April 25. This is hardly acceptable.
Power generation facilities are public utilities, and the public has a very reasonable expectation that they should be operating; if they are not functioning as and when they are expected to, an immediate explanation should be forthcoming. Neither the public nor the regulator, which serves the public interest, should be made to wait for the operators to submit their explanations at their own convenience.
In the absence of those reports that would help the ERC determine what penalties or other corrective actions need to be taken to prevent future unexpected power shortages, the ERC speculated that the advanced age of Luzon’s power plants was a significant contributor to the recent problems.
According to figures provided by the ERC, more than 70 percent of the generation facilities that provide electricity to Luzon are 16 years or older, and about 15 percent have been in operation for 30 years or more. About two-thirds of the plants that experienced unscheduled outages recently were those older than 16 years. The implication is that because facilities naturally require more maintenance as they age, they are more prone to breakdowns.
That is disturbing on two levels. It raises questions about both the soundness of the generation infrastructure and the adequacy of electricity supply.
According to information from the US Energy Information Agency and various academic studies, a typical design life for most types of power plants is 30 years, meaning that it should operate at the expected level of reliability (available 80 to 90 percent of the time) for at least 30 years before falling below that level. The basic figures on plant ages and outages offered by the ERC already suggest that Philippine power plants are not meeting basic benchmarks for reliability.
Likewise, the stark fact that so many of the power plants are of advanced vintage shows that the country is still lagging behind in developing energy sources for future needs. Not only are replacements for plants that will soon age beyond usefulness not being developed, there is little development toward meeting greater electricity demand in the future.
These are not new problems, but each successive period of tight power supply brings them into increasingly sharper focus. The ERC, the Department of Energy and other stakeholders should certainly consider this trend a guide to developing effective policy.
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