Emergency powers eyed

By: Leila B. Salaverria - 11 years ago

President Benigno Aquino III. AP FILE PHOTO

To forestall power shortages, some members of the House of Representatives are proposing to give President Benigno Aquino III emergency powers to give him more control over power generation in the country.

Congress should look into the possibility of granting limited emergency powers to the President so he can fast-track the construction of more power plants, Eastern Samar Rep. Ben Evardone, an administration ally, said on Saturday.

An opposition party-list member, Rep. Terry Ridon (Kabataan), said the state should take over all power utilities if distributor Manila Electric Co. (Meralco) and the private power generators could not provide affordable service to the public, in order to avoid the prospect of debilitating blackouts.

Evardone said that with emergency powers, Mr. Aquino should be able to deal with the “catastrophic problems” of rising cost of electricity and deterioration of mass transport facilities.

He said the country needs to have more power plants to meet growing demand and to bring about lower electricity costs.

It also needs to have more mass transit systems to ease traffic problems and other commuter woes, he said.

“And all of these can be achieved by empowering President Aquino with powers that will expedite the processes of implementing mega power and mass transit systems,” Evardone said in a text message.

“Maybe we can shorten the bidding process under the Procurement Act and simplify the Swiss challenge mode of inviting investors in the power and transport sectors,” he added.

Limited for a year

Evardone said the usual means of dealing with public utility woes may not be enough given the magnitude of the problem.

“It has been proven that palliative solutions to these problems have very little impact,” he said.

“The sad state of our power and mass transit facilities, which have been the result of long years of neglect, has had a very debilitating effect on our economy and people,” he said.

Evardone said the emergency powers he envisions for the President would cover only projects in the power and transport sectors and should last for a limited period, perhaps about a year.

He said this would be a good time to grant such powers, as the President enjoyed the support of domestic and international investors.

Precedent in 1993

Only one other president, Fidel Ramos, was granted emergency powers to deal with an electric power crisis in 1993. The country was then experiencing widespread blackouts because of huge demand for electricity and ageing power plants, the abolition of the Department of Energy and the mothballing of the Bataan Nuclear Power Plant by the previous Cory Aquino administration.

Congress not only created an energy department but also gave Ramos special emergency powers to resolve the power crisis. Using the powers given to him, Ramos issued licenses to independent power producers (IPP) to construct power plants within 24 months. To attract investors, he approved supply contracts that guaranteed the government would buy whatever power the IPPs produced.

A national emergency

But this became a problem during the East Asian financial crisis of 1997 when the demand for electricity contracted and the Philippine peso lost half of its value.

Ridon said that if blackouts are indeed threatening the Meralco’s franchise area, that can be considered a national emergency, which means the state can take over power utilities, from generation to transmission and distribution.

“If Meralco and the power generators cannot deliver affordable power rates to the public, all power utilities should now be taken over by the state for its operations,” he said in a statement.

He believes that the government can seize control of generation plants even if they are not considered public utilities under the Electric Power Industry Reform Act (Epira).

“Despite the Epira provision, the public now knows that power generation utilities have the greatest effect on power rates. Clearly, these utilities are businesses imbued with great public interest,” he said.

He said threats of power supply disruptions from Meralco could be construed as blackmail in order to get the public to accept higher electricity rates.

Ridon said he might even seek the repeal of Meralco’s legislative franchise if it could not provide the public electricity at the least cost.

The public was able to get a temporary respite from Meralco’s latest proposed power rate increase of P4.15 per kilowatt-hour, but the firm is seeking the dismissal of the petitions against the increase before the Supreme Court.

Meralco has explained that the rate increase was necessitated by the scheduled shutdown of the Malampaya natural gas pipeline last year and several power plants that were supposed to make up for Malampaya’s closure also made unscheduled shutdowns during the period, forcing Meralco to buy more expensive power from the Wholesale Eletricity Spot Market (WESM).

Meralco money woes

Meralco on Saturday said it had been receiving demand letters to pay the power bills it incurred during the the Malampaya maintenance shutdown, but could not make full payments because of the Supreme Court order stopping it from collecting the P4.15/kWh increase in generation and related charges.

The company said its cash flow was at risk of being severely restricted, and that further constraints on its ability to collect the increased charges could disrupt the entire power industry.

If this happens, Meralco said, rotating blackouts will “surely” hit its network of 4.8 million homes and 500,000 industrial/commercial customers comprising private businesses and government institutions.

“If the current situation persists, Meralco will face the great risk of not being able to purchase all the electricity needed for the succeeding months, especially if abnormal or extraordinary supply versus demand conditions continue,” Meralco explained in the comment it submitted to the high court on the temporary restraining order (TRO) against the rate increase that the latter issued last Dec. 23.

Meralco said that to cope with the TRO, it partially deferred payments to the operator of the WESM, some power suppliers and the National Grid Corp. of the Philippines.

“While the TRO is effective, Meralco is at undue, ever-present, and constant risk and threat of being required to pay the full amount of the increase in generation and transmission charges or of being denied continued access to electric supply and transmission under its PSAs (power supply agreements), the WESM and the relevant ERC (Energy Regulatory Commission) regulations,” Meralco said.

Meralco asked the high tribunal to lift the TRO and deny the petitioners’ prayer for the issuance of a writ of preliminary injunction.

It also asked that the power generation companies be enjoined to file comments on the TRO, and that the petitions of party-list Bayan Muna and the National Association of Electricity Consumers for Reform (Nasecore) be dismissed.

The militant Bayan Muna said in a statement that Meralco and the power generation firms are “blackmailing” the public into accepting higher power rates supposedly to prevent blackouts in the wake of the temporary restraining order issued by the Supreme Court on the proposed power rate increase. With Riza T. Olchondra