Who is to Blame for the Delays of the 1,200mw Atimonan One and 600mw Redondo Power Coal Projects? Meralco, Consumer Groups, or ERC?

David Celestra Tan, MSK
4 June 2018

The country needs additional power supply specially the modern and cost efficient kinds. The 1,200mw AtimonanOne “supercritical coal plant” and the 600mw Redondo Power project would have come in nicely in 2020 and 2021 to boost the power supply to our growing economy.

Now these two plants totaling 1,800mw are in limbo and crying for approval of the rates and PSA. The ERC has been put in a bind  because they were found guilty by the Office of the Ombudsman of evidently favoring Meralco by belatedly extending the implementation of the CSP policy for bidding power supply agreements.

Meralco with the help of their congressional sympathizers have been incessantly pushing for the approval of these two projects and raising the spectre of brownouts if they are not started soon. They also raised the issue of higher project costs with the EPC contracts having expired. That means they are already angling for a rate increase even before the approval of the projects.

Who is to blame then for the Delays of the two projects? Is it the Alyansa Para sa Bagong Pilipinas Inc (ABP) a consumer group that filed the complaint to the Office of the Ombudsman and to the Supreme Court or the MVP Group that tried to short-cut the process by hastily awarding the contract to its sister company Meralco PowerGen on April 26, 2016, just 3 days before the mysterious new deadlineof April 30, 2016? Or is it the brilliant person at ERC who thought this 3,551mw caper will not be noticed, buried in the avalanche of 90 applications for PSA’s in the ensuing extension? There are elephants among the herd sirs!

The MVP Group through its subsidiaries Meralco and Meralco PowerGen had been working on these two projects for years. The 600mw Redondo Peninsula coal project in Subic had been in development for at least 5 years before the original CSP policy deadline of November 6, 2015.  Its fight with the environmental groups is well chronicled.  Why did they not have a power supply contract signed with Meralco as early as 2012 when negotiated contracts were still legal?

The 1,200mw Atimonan One in Quezon is a more recent development project but Meralco started kicking it around in 2013 yet, a good two years before the November 6, 2015 effectivity of the CSP regulatory implementation.  I mean the MVP Group and Meralco had known as early as June 2015 that a CSP policy pronouncement had been established by the Department of Energy and the ERC had 120 days to issue an implementation resolution.  They could have crafted a PSA in 90 days or months before the November 6, 2015 magic date.I mean it took them only 40 days from March 15, 2016 to April 25, 2016 to hammer seven complicated contracts with five different partners.

There are indications that Atimonan One was still in the conceptualization stage at that time and its consortium is not yet finalized. In essence the MVP group was still looking for a partner who would agree to being a minority.

According to the OMB, as late as January 2016, Meralco was still petitioning the ERC to approve their right to undertake a swiss challenge bidding as a form of CSP.  The ERC disapproved the request. What transpired in the talks between ERC and Meralco between January and the March 15, 2016 decision of ERC to postpone the CSP implementation we might never know…..but can guess.

The fact is consumer groups could not help but smell a rat at the evident fast tracking of seven (7) PSA’s totaling 3,551mw by Meralco and its sister company Meralco PowerGen on April 25 and 26 2016, just enough to prepare an ERC application and make a filing with the ERC in the early morning of April 29, 2016. Halatanamanmasyado. To their bad luck, the integrity of ERC had been put in a bad light when one of its top officials committed suicide claiming corruption in the regulatory agency.

Is consumer group ABP (and the other consumer groups Bayan Muna and Agham) to blame for the so far two years delay (2016 to 2018) in these two projects?

At the end of the day, it is still the public interest that should be primordial to everybody.  And consumer groups are willing to listen to a win-win solution to at least half of the 3,551mw in the public interest.  We tried asking the DOE to intervene. We tried asking the ERC for a dialogue on what can be a good compromise. They are not interested apparently being sore at public interest group ABP for getting them suspended. Or they have a solution that will get these short-cut projects still forced to approval.

Perhaps when a national emergency had occurred.  It will take only a “coincidental” breakdown of power plants that are also owned by the Meralco partners in these projects and widespread brownouts to bring down the Meralco population to their knees begging for electricity. Yes, damn with the CSP, give me light!

Let us be realistic. Had Meralco undertaken a CSP in 2016, they would have completed the evaluation and awarding already by early 2017 which is a year ago. Then those projects would have broken ground in early 2017 and 2 years away from completion by now.

This is the MVP Groups short-cutting at their determined effort to monopolize power generation at rates they negotiated among themselves that has backfired. And now it will be the Meralco customers eventually suffering.  Don’t look at the consumer groups sirs. We were not the ones who violated the rules.

Would the MVP Group agree to subject half or 1,750mw to a true CSP and the other half including Atimonan One and Redondo to some fine combing by the consumer groups of their negotiated contracts to eliminate unfavorable terms to the consumers?  How about 600mw to Atimonan, 300mw to Redondo, 300mw to Semirara, and 600mw to San Miguel? Bid the rest as natural gas projects. Will the ERC see the sense in this in the public interest? Or will it be an all or nothing deal? Who will intervene? Help!

At this stage it does not matter who is to blame. Let us hope someone will lead the resolution in the public interest.  We need additional power supply by 2020 and 2021. And let us start truly bidding the new plants for 2022 and onwards. We hope we consumers are not sacrificed too much.

And how is your summer?

MatuwidnaSingilsaKuryente Consumer Alliance Inc.
matuwid.org
david.mskorg@yahoo.com

While on a brief vacation:

I was reminded I am in California when my male haircutter said “my husband works in the pharmaceutical industry”.