Gov’t cautioned on Mindanao power rate hike

The country’s largest business organization has cautioned the government against unduly raising the cost of power in Mindanao in the process of addressing the lingering brownouts blamed on insufficient capacity to generate electricity.

In a statement, the Philippine Chamber of Commerce and Industry (PCCI) stressed that merely focusing on propping up available supply of electricity “would cause disastrous results to consumers in terms of power cost, as is now being experienced in Luzon and the off-grid areas.”

Earlier, President Benigno Aquino III said the solution to the current power crisis would definitely come with increased rates.

“A coherent solution must be complemented with sustaining lower power cost,” the PCCI said. It added that the current situation would require “a blend of strategies uniquely crafted” for Mindanao.

“As strategically and correctly planned years before, lower power cost was the key driver in making businesses locate and thrive in Mindanao and would be the strong platform in achieving peace in the area,” said Miguel Varela, chamber president.

Roadmap out of crisis

Varela emphasized that his group was supporting “a clear and predictable roadmap that would give immediate and mid- to long-term response to the Mindanao crisis” that would effectively address the concern of producing the desired amount of power supply and having it at lower cost.

To sustain this strategy, the PCCI said the government should ensure that the hydroelectric power plants “should be Mindanao’s core energy source” to be complemented with diesel-based reserve power facilities.

Jose Alejandro, PCCI vice president for energy, in a separate statement said that in support of this strategy, “diesel plants and barges should remain to be in government hands as dispatchable reserve or standby power.”

In the case of the Agus hydroelectricity generation complex, Alejandro explained that dredging, rehabilitation and expansion initiatives could raise its dependable capacity.

He estimated that the Agus complex had the potential to “produce up to 800 MW (megawatts) of power for about nine months, instead of only six months, of the year, and a potential year-round dependable capacity of up to 350 MW.”

Such supply capacity can be complemented with 450 MW of “slow-speed diesel capacity,” he added.

Exhaust hydro potential

Alejandro further stated that the proposed hydro-diesel mix would bring an increase of about P1 per kilowatt-hour “in spread-out fixed costs.”

Agus is capable of producing hydropower at P3 per kWh, Alejandro said, pointing out that the hydro-diesel mix strategy would only bring generation cost up to P4 per kWh.

“Mindanao consumers will only pay for the diesel fuel when they run during the summer,” he explained.

The PCCI said it acknowledged that “coal plays an important role in the generation mix (but) the high power cost will overwhelm Mindanao consumers.”

“Hence, the development of other baseload generation plants with coal at the forefront, must be done only after fully developing all the potential hydroelectric power sites on the islands,” it said.

To alleviate the current situation, the

PCCI said the immediate measures to be taken must be “leading to a mid-term and forward-looking development.”

Among its recommendations are to bid out the Agus and Pulangi hydro plants for a “Repair-Operate-Maintain-Transfer” contract. This will “release some additional 150 MW in less than 15 months,” it said.

The PCCI also supported the development of a 200 MW coal-fired plant by Conal Holdings in Sarangani and another

300-MW coal-fired capacity to be undertaken by a consortium of 21 electric cooperatives in Mindanao.

“This should produce reasonably lower-priced power since it is co-owned by the co-ops,” it said.

While power is still short, the PCCI asked that load shedding must be done “with special and clear concern for areas where industries and major economic activities are located to avoid major layoffs.”