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Published On: Wed, Apr 18th, 2012

Are the Mindanao Blackouts Artificial?

Rotating brownouts...

In the wake of the recent rotating brownouts affecting many areas of Mindanao, Tacurong Online tries to dig deeper  into the nitty gritty of the current “power crisis”. Left unsolved, this power crisis has great implications to Tacurongnons and Mindanaons in general- reduced electrical power supply and looming increase in the power rate charges. Both have  chilling effects on the average consumers. This same consumers will also  have to contend with what some people in the government will offer as solutions. Since the power crisis emerge in Mindanao two presidents ago,  neither have adequately addressed the issue yet. Again, politicizing this issue is never the aim of this site. A workable, consensus based, affordable  and practical solution is what we’re looking for and to do that, let’s nitpick the different sides of the story and let the people of Tacurong decide for themselves!

Here’s a very good analysis-commentary of the current power crisis  in Mindanao by no less than Dave Tauli of  Alliance of Mindanao Electric Service Companies. Incidentally, I stumbled on this article browsing the website of our very own electric coop SUKELCO (Sultan Kudarat Electric Cooperative)

Are the Mindanao Blackouts Artificial?

Are the rotating blackouts in Mindanao artificial? Are the blackouts caused by human-made errors of commission or omission? Or are the blackouts due to natural causes such as droughts and floods?

The blackouts are artificial, says Sec. Luwalhati Antonino of the Mindanao Development Authority. The blackouts are not artificial, and are due to natural and unavoidable causes, says Sec. Jose Rene Almendras of the Department of Energy. Which government official is more in touch with the realities in Mindanao? We can know by looking at the facts behind the blackouts.

Before looking at the blackouts of 2012, however, let us remember that the 2010 blackouts in Mindanao were artificial, and brought about by the PSALM-NPC. They were not due to drought as the PSALM-NPC, the DOE, and the NGCP have continued to claim. The 2010 blackouts occurred because in 2009 the PSALM-NPC deliberately reduced the level of Lake Lanao to around 700 meters above sea level at year-end, which is one meter below the level of around 701 meters that it should have been as of December 31, 2009 in accordance with the Rule Curve for Lake Lanao in 2009. We need to remember that the 2010 blackouts were caused by PSALM because they still have to be legally charged for bringing about the economic devastation of Mindanao by the 2010 blackouts. I do not think, though, that there is a statute of limitations for the crime of economic sabotage, so we need not hurry to file suit against the PSALM. Let us attend, instead, to ending the 2012 blackouts. Before looking to the solutions, however, we have to examine the causes, and find out whether or not the blackouts are artificial.

Following are the facts and events in the Mindanao power sector that relate to the ongoing blackouts of 2012.

1. In February and March 2010, the PSALM consummated the disposal of the NPC-owned power barges nos. 117 and 118, each rated 100 MW. The power barges were sold to Therma Marine, Inc. (TMI) at the total price of US$ 30 million, which is around one-third of the appraised value of the power barges. This reduced by 192 MW the total dependable capability of the NPC-owned and controlled power plants in Mindanao, making the PSALM at that point unable to supply the total contracted requirements of their customers in Mindanao.

1.1 Notwithstanding the disposal of PB 117 and 118, the PSALM could have ensured that there would be adequate power capacity of power plants to supply the requirements of Mindanao customers if they required the TMI to continue to provide from the power barges their share of the power supply contracted from PSALM by customers in Mindanao. This was the normal practice when the PSALM sold power plants in Luzon and the Visayas. But it was not done in the case of the disposal of PB 117 and 118.

1.2 Because power supply was not assigned by PSALM to the power barges, and neither was the NGCP-NPC ancillary services contract assigned to the power barges, the TMI was free to enter into an Ancillary Services Procurement Agreement (ASPA) with the NGCP for 100 MW capacity of the two power barges. The contract was made effective in February 2010 for one power barge and in March 2010 for the other power barge. The ASPA was designed to enable TMI to earn (as Capital Recovery Fees) around three times more than they spent to buy the power barges. When the ASPA was submitted to the ERC for approval, the proposed Capital Recovery Fee was reduced by ERC to the actual buying price of 30 million US dollars. (Lest it be forgotten, I mention that the NGCP is probably culpable for lack of due diligence in entering into the ASPA with TMI. They knew at the time of negotiations that the TMI bought the power barges for 30 million dollars, but they allowed a Capital Recovery Fee of around three times the purchase price.)

1.3 The TMI, however, filed for reconsideration of the ERC decision on the CRF and, against public expectations, the ERC reversed their earlier decision, and allowed TMI to recover three times what they paid for the power barges. (I say “against public expectations” because, while the ASPA hearings were going on, ERC Chair Zenaida Ducut promised to Mindanao lawmakers, headed by Cong. Rufus Rodriguez, that the ERC would render a decision on the ASPA that would be “favorable” to the public; this was precisely the ERC decision to allow only US$ 30 million as CRF. To her credit, the Honorable Zenaida Ducut, voted against the three-fold increase in the CRF when the ERC reversed their decision on Motion for Reconsideration by TMI. She was outvoted, however, because, according to reports by ERC insiders, three other commissioners voted in favor of the exorbitant CRF: Commissioners Jose Reyes, Rauf Tan, and Alejandro Barin. The latter two commissioners retired from the ERC in July 2010, a month or so after the ERC flip-flopped on the ASPA case, and allowed TMI to earn millions of dollars in excess of their purchase price for the power barges.)

1.4 The economic damage from the blackouts in 2010 was reduced because the NGCP used PB 117 and 118 to provide baseload power supply. (This was covered up by NGCP by calling the supply of baseload energy as “dispatchable reserve service”. It is illegal for the NGCP to contract for energy to be delivered to end-users.) The unfortunate effect of this moro-moro on the part of the NGCP was that power customers paid for baseload power supply at the more expensive rates of ancillary service charges. I mention this because the penchant of government agencies in the power sector to use emergency situations to enable private corporations to make excessive profits seems to be repeated in the 2012 blackouts.

2. In August 2010, after the P-NOY government came into power, the Mindanao consumer groups and the chambers of commerce and industry sent letters to Sec. Jose Rene Almendras, NPC President Froilan Tampinco, and PSALM President Emmanuel Ledesma, Jr., setting out what the government energy family should do in order to prevent recurrence of the 2010 blackouts. The recommendations included: the dredging of the forebay of Pulangi IV and the Agus river channel in Baloi, the rehabilitation of the Agus hydroelectric power plants, the rehabilitation of Power Barge 104 in Davao City to increase its dependable capacity, and the utilization of PB 117 and 118 for baseload power supply instead of ancillary services. Had the DOE and PSALM carried out the main recommendations that they received, the 2012 blackouts would not have happened. The DOE and PSALM, however, did none of the above. And they cannot claim ignorance of the measures that would have prevented the 2012 blackouts in Mindanao. In the case of PB 104, the PSALM not only did not rehabilitate the plant (keeping plant capability at 10 MW instead of 32 MW), but advertised in February 2012 to sell the diesel plant along with three other power barges in Iloilo.

3. Because of the inaction by the DOE and PSALM in the repair and rehabilitation of the hydro plants, the peaking capability of the Agus and Pulangi hydroelectric power plants was reduced from 889 MW as of the end of 2009 to only 635 MW as of January 2012, a drop of 254 MW. The NPC Mindanao officials claim that they submitted to the PSALM in 2010 and earlier the budgetary proposals for repair and rehabilitation of power plants in Mindanao, but the PSALM never gave them the funds for that purpose. (Reports from NPC people say that even in the provision of operating funds, such as for payment of contracts with security agencies, the PSALM is frequently delayed for many months in giving money to NPC.)

4. The following point does not relate to the cause of the blackouts, but illustrates the lack of awareness and concern (or NOYNOYING) by Sec. Almendras and the DOE with respect to the impending blackouts in Mindanao.

4.1 When the hearings of the Feed-in Tariff for renewable energy power plants was started by the ERC in July 2011, the Mindanao Coalition of Power Consumers appealed to Sec. Almendras to increase the capacity of solar PV power plants to 100 MW for initial construction in order to help address the looming blackouts in Mindanao, to approve Renewable Energy Service Contract applications for RE power plants, and to help accelerate the approval of the FIT so that the construction of RE resources in Mindanao could be started soon. Sec. Almendras did none of the above. On the contrary, he interposed unreasonable objections to the approval of the FIT, thereby further protracting the FIT hearings. It was only in January 2011 that he started (highly selective) approval of RESC applications, but he subjected the RESC applications for large hydro plants to a complicated and unsound bidding process that would move approval of the applications to several years into the future.

5. The NGCP did not renew the ASPA with TMI for 100 MW of ancillary services from PB 117 and PB 118 when the contracts expired in February and March 2012. Non-renewal of the ASPA forced the NGCP to utilize for ancillary services the Agus 4 and the Pulangi 4 hydroelectric power plants, thereby reducing available power capacity in Mindanao by at least 150 MW.

All the foregoing facts and events came about from the decision or non-decision of the government energy family and the NGCP. The Mindanao blackouts are the result of sins of commission and omission, or malfeasance and misfeasance as the legal luminaries put it. None of the facts and events was brought about by an Act of Nature.

Of course, the 2012 Mindanao Blackouts are artificial!

Dave Tauli
Alliance of Mindanao Electric Service Companies

About the Author

- I’m a traveler. I work fulltime as a medical professional. I go to different places most of the time I’m off my day job. I shoot photos for fun, hack computers for even more fun and play badminton as my exercise. And yes, I’m not rich.

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