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Red alert means the contingency reserve is near zero, if not negative. Yellow
alert means the total power reserves is less than the capacity of the largest
plant online, which for the Luzon grid is 647 megawatts (MW).
NGCP has issued Yellow Alert last April 8, May 9, 14, 20 and 26, 2014. It also
issued Red Alert (RA) on the following days this year. The reasons
are also provided.
1. RA May 16: Two unscheduled shutdowns, one unit of Sual coal plant
(647 MW) and one unit of Pagbilao coal plant (367 MW), total power
decline was 1,014 MW. Repairs took two to six days.
2. RA June 17: Malampaya Gas Restriction, Manual load dropped 105 MW.
3. RA June 25: Three unscheduled outages: Sual 1 (647 MW), Calaca 1 (300
MW), Masinloc 2 (315 MW). Total power decline of 1,262 MW. Plus
derated capability of GN power (Mariveles) 1&2.
4. RA September 9: Reserves estimated to fall down to as low as 193 MW.
Two unscheduled shutdown on September 8: GNPower Unit 2 (300 MW)
and Ilijan Block A (600 MW). Plus two scheduled maintenance shutdowns:
Sual Unit 2 (647 MW) and Kalayaan Unit 1 (177 MW). Total power decline
was 1,724 MW. Calaca Unit 2 (300 MW) also halted operation early of
September 8 but was quickly revived in the afternoon of same day.
Note these huge power plants that conked out unscheduled: Sual
(15 year old), Pagbilao (18 yo), Masinloc (19 yo) and Calaca (30 yo). Metro
Manila and provinces in the Luzon grid are dependent on power facilities listed
on the left. Many of them are already old (more than 20 years old) and hence,
they either require more frequent maintenance shutdowns or
are prone to unscheduled shutdowns.
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Table 1. Existing Power Plants in Luzon, Early 2014
(Marked in red are power plants that are 20 years or older)
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Source: DOE
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Chart 1 is on committed power projects. Wind for late 2014 to 2015 is 253.5 MW (Northwind 18,
Burgos 87, Caparispisan 81, Pillila 67.5). That looks substantial but wind power
is highly unstable and unreliable in delivering power.
Take the case of Germany, possibly the wind and solar power giant in the world today based on
their installed capacity. In the chart below, gray is conventional power (coal, nuclear, gas), yellow is solar,
dark blue is wind, light blue is hydro, and green is biomass. Red is actual German consumption.
Notice the huge fluctuations in solar and wind power output. At night there
is no sun and solar output is zero; wind output would show up only
sporadically. It is highly unstable. Thus, it is the conventional power sources
that provide stability and actual electricity to German consumers.
The story is no different for the US and UK.
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So compare the bottom three lines, actual electricity output of wind and solar for
the three countries, vs. other three lines (rated capacity of wind and solar). The
gap is big, and not just for one or two years but for all those years covered.
For the Philippines therefore, the threat of brown outs in the hot months next
year remains. What can government and the public do?
Here are some modest policy proposals.
1. Get more peak-load plants like those mobile diesel power barges. In Luzon,
there is only one existing, Therma Mobile (TMO) of Aboitiz Power. It is an old
power barge actually, bought from Duracom Power and was idle for about five
years until it was rehabilitated and re-commissioned in November 2013 just
to prevent rotating brownouts in Metro Manila and other Luzon provinces
during the Christmas holiday season.
Diesel as fuel of this power plant is expensive compared to coal, natural gas or
hydro. Thus, consumers must be ready to pay higher electricity when these diesel
plants are used, in exchange for no brown outs. The public and the militant
activists should recognize this trade off and not resort to frequent street rallies
or going to the Supreme Court and demand a Temporary Restraining
Order (TRO) for short-term power rate hikes.
2. Reduce power demand on peak hours of those hot months by asking the
heavy users like big industrial zones, mining firms and cement plants, to have
their own power generator sets. The Interruptible Load Program (ILP) seems
to be working, more big companies should volunteer to join the ILP. But
they should be compensated somehow, in the latter months as these
companies would have larger power cost on those periods
that they were using their gen sets.
3. The public, households and commercial offices can help reduce power
demand by using more energy-efficient lights and appliances.
4. Government agencies should reduce the bureaucracies and permits they
require in building and commissioning new power plants. DOE Sec. Petilla
once said that in some projects, some 100 signatures are required to
have one big power plant be put up and keep running.
5. Over the medium term, government should reduce the taxes and royalties
in power as these impositions significantly contribute to high electricity prices.
And the public blame the power companies and even call for Junk
EPIRA, back to government monopoly in power.
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While the power companies have their share of blame, the public does not realize that government is partly or
largely to blame for high electricity cost in the country. Aside from VAT and other national and local
taxes and fees, the royalty for Malampaya gas effectively an energy tax that the Malampaya gas field
consortium passes to the consumers can be as high as P1.45/kWh, based on the
USAID-commissioned paper published in April 2013.
Table 2. Rice Production, Trade and Consumption in East Asia, in 000 Metric Tons
Source: FAOStat, accessed 25 March 2014. It is contained in a report by DBM-DOF-NEDA to the President last April.
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Productivity wise, Filipino farmers is actually larger than that of their counterparts in
Thailand, although lower than those in Vietnam. If Vietnam has the same number of
typhoons per year as the Philippines, its productivity would possibly be similar
to the Philippines. Vietnam has only about 5 typhoons a year or less, vs. the
PHs 19 typhoons a year on average, about half of which make actual landfall
and knock down thousands of hectares of often harvestable rice,
resulting in high crop losses.
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Table 3. Rice Land and Output, Comparison among the Philippines,
Thailand and Vietnam
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About the Author
Bienvenido Nonoy Oplas, Jr. is the founder and
President of Minimal Government Thinkers, Inc. a free
market think tank .
To bring down rice prices and stabilize rice supply, the following modest proposals are advanced.
1. Government should liberalize rice trade and importation, abandon rice protectionism. Remove National Food
Authority (NFA) monopoly in rice imports.
2. End the quantitative restrictions (QRs) and convert it to low tariff, ultimately leading to zero tariff, especially for
rice imports from our neighbors in the ASEAN.
3. In exchange for rice trade liberalization and removing NFA import monopoly, its accumulated debt, around P155
billion, may have to be assumed by the national government. This means taxpayers including those who do not buy
NFA rice, will pay for its debt.
4. Certain NFA assets like some warehouses should be privatized. Proceeds from such privatization should be used
entirely to retire some of its debt and not be used for any old or new food subsidy programs. This way, NFA debt
that will be passed on to the national government and will be paid by taxpayers will be smaller.
Overall conclusions and proposals: To have more power plants, more stable energy supply and cheaper electricity, there should be less government bureaucraties, permits, taxes, royalties and price control in power. And to have
cheaper rice and more stable rice supply, there should be less or no government protectionism and NFA monopolization of rice trade. Government should embrace free trade in rice.
ENDNOTES:
Presented at the Citizens Watch Roundtable Discussion, September 5, 2014, UP National
College of Public Administration and Governance. Sponsored by the Stratbase Research Institute and the Office of the Vice President for Public Affairs, UP Diliman.
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