The Unreachable Promised Land of Lower Power Costs….And Options for the BNPP.

David Celestra Tan, MSK
1 November 2018

Lower Power Costs (LPC) is a consumer nirvana that is being promised to the public for the last 21 years since they started debating the deregulation and privatization of the power sector.

Everytime the government wanted to justify something in the power sector LPC is the promised land they use to entice the public into approving or not opposing their scheme. (That and the threat of power blackouts!) It was the rallying flag for the adoption of open access and the Wholesale Electricity Spot Market. It was the hoodwink to justify the change from RORB rate setting to PBR (performance based rate setting) methodology. It is the gloss over for the approval without removing the sister price premiums of the controversial 1,200mw Atimonan One and the seven smurfs. LPC is Solar Para Sa Bayan’s bamboozle for its attempted nationwide “sword and armor” solar mini-grid legislative franchise (despite its own rejection of its claimed P2.99 per kwh rate).

Yet we never achieve Lower Power Costs.

Our power costs are high and getting higher because Lower Power Costs is not really a resolute guiding policy and program of government. Because if it were, we would not have imposed a 12% VAT on power when the country went bankrupt after the 2004 nationwide election. We would have insisted on a truly competitive bidding process for power generation supply instead of evading CSP.  We would not have tolerated the treasons of Section 45 of the Epira Law and Rule 11 of its IRR that opened the loophole for concentration and cartelization of power generating capacity.  We would not have deluded ourselves into believing that it is to the public interest to change to PBR from RORB that now allows Meralco to earn 25% a year on their investment instead of the conscionable 12%. And make us pay in advance for their projected investments. We would not have appointed dyed in the wool deal-making politicians to the Energy Regulatory Commission. We would not impose additional taxes on fuel used for power generation. And government officials would not be at peace with themselves that they are not willing to truly do something about it.

Sadly,Lower Power Costs is reachable and unreachable only because we are not determined to reach it.

Our power costs will be lower by P0.75 to P1.50 per kwh if we can resolutely make power generation contracts to be truly competitive and not negotiated among sister companies and cartel members. It will take years to achieve this.  On the other hand, we can reduce our power costs by a similar amount on Meralco’s distribution charge by reverting back to RORB or modifying the atrocious PBR.  It might take a year of regulatory pitch battle with Meralco but it is still a big quicker step towards reducing our power costs. (Faster if the Office of the President steps in!)

We wave the flag of Lower Power Costs to justify deals. (Even Atimonan One they said will reduce power costs despite what we estimate to be now P5.50 per kwh after applying its pricing indices). The current push of the Department of Energy to diversify the country’s energy mix to include LNG, Geothermal, and Large Hydro are long felt and should be supported if only to balance the greed towards climate-killer coal.  We understand waving the LPC flag for the inclusion of nuclear technology specially the newer and safer lower temperature ones.  But we question the wisdom of reviving the old Bataan Nuclear Power Plant as our way to get into nuclear. 

To be fair, the BNPP was a good technical idea at that time. But we have to look at the realities now. Reviving the BNPP will not lower power costs. BNPP is now a bottomless pit. It would be trying to revive a 50 year old technology in a power facility that was never run in the first place.  What is there to revive? The $2 billion dollar estimate will probably cost more.  For $2 billion we can build a totally new LNG power plant of 1,000mw. BNPP was a nightmare that we already paid for dearly as a nation.

Wala batalagatayongrespeto at awasamga Filipino that we will throw them into another BNPP nightmare that will be even bigger?  We can take an enlightened look into adding nuclear into our energy mix and they can really lower power costs, but we have to stop making a deal for BNPP.

We are curious why this revive the BNPP idea keeps coming back. There are no public interest technical or economic benefits to it.

BNPP Super Discounts Mall Complex Anyone?

If we really want to, let us just salvage the BNPP infrastructure and property into more sensible and quantifiable cost power or energy facility like an LNG terminal. Or turn it into a “shopping by the sea complex” where the BNPP can be a centerpiece monument to dictatorship decadence. It can also be a jump off point for outlet shopping on the disputed islets when SM and Citymalls start running out of mainland spaces and “expand” to the Masinloc shoals (yes shopping and snorkeling at the same time! And If you get lost you end up in Shenzhen!)

Seriously, if we really want to try revive the 600mw BNPP the only sensible way for the country is to do it under what is called “LROM” or lease-rehabilitate-operate-maintain where the private sector proponent will get the lease (even at P1 a year!) but take the technical, financial and operational responsibility for reviving the plant and even expand it to 1,000mw. In return the DOE will cause the guaranteed off-take by the DU’s including Meralco at P4.50 per kwh or 15% lower than the average coal plants or 10% lower than LNG power.   This way consumers and taxpayers are protected from another deal for the BNPP. Let us remember that the government under the EPIRA Law is no longer allowed to go into power generation.  Either that or turn it into an LNG import terminal.

Happy long “all saints day” weekend. (Dahandahan po sa paggamit ng aircon!)

MATUWID NA SINGIL SA KURYENYE CONSUMER ALLIANCE INC.
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david.mskorg@yahoo.com.ph