What energy shortage? Reyes' estimates confusing

By Leilani Chavez, abs-cbnNEWS.com

Posted at Sep 23 2009 09:25 PM | Updated as of Sep 25 2009 02:10 AM

MANILA - The scare of power outages in 2010—specifically on Election Day—is unfounded. At worst, the chances of brownouts on May 10 itself are slim.

The confusion over the projected energy shortage stemmed from a recent budget hearing at the House of Representatives where Energy Secretary Angelo Reyes said there is a projected 4,100 megawatt (MW) shortfall all over the country.

However, he failed to mention a crucial detail: the shortfall is not just for 2010 but spread over 10 years.

In fact, the projected energy shortage for the Luzon grid for 2010 is only a mere 150 MW. This is a far cry from the 3,000 MW that was reported earlier. (Read: Possible black-out looms over 2010 elections.).

A 150 MW shortage will affect just about 833 households--not the entire Luzon grid. This computation is based on the average household consumption of 180 kilowatt per hour in the franchise area of the biggest power retailer, Manila Electric Co.







Urgent or not?

Albay Rep. Edcel Lagman told abs-cbnNEWS.com in a phone interview that lawmakers who listened to Reyes during the September 15 budget hearing were of the impression that brownouts in 2010 are looming.

“The impression we got is that there is a pressing shortage, that its critical, and that it has to be addressed,” said Lagman who is the vice chairman of the House appropriations committee.

Last September 15, the appropriations committee conducted a hearing on the proposed budget for the Energy Department in 2010.

Reyes’ presentation to lawmakers showed that there is a projected energy shortage of 4,100 MW nationwide, or for all 3 island grids.
Further, citing the 2008-2017 Power Development Plan, Reyes said 3,000 MW or a large chunk of the anticipated shortage is expected to happen in Luzon.
Reyes’ statements alarmed lawmakers who predicted a potential energy crisis in time for the upcoming national elections.

At the same hearing, Reyes stressed the need to grant emergency powers to President Arroyo to address this problem. (Read: Reyes says Arroyo's 'emergency powers' limited)

On top of this, Reyes asked Congress to allocate some P3 billion to finance a power contingency plan prepared by state-owned power producer, the National Power Corp.

"It is mandatory that we have adequate and secure supply (of electricity) to ensure a smooth 2010 elections, and that is the challenge at hand," Reyes told reporters then.

Shortage over 10 years 
Reyes pointed out that the figures are not at all alarming. But the energy secretary failed to clarify that the shortages are distributed over several years and will not occur on a one-time basis.

Further, this is only anticipated shortage, meaning this “might or might not” happen, according to an official at the Electric Power Industry Management Bureau (or Power Bureau). This unit within the Energy Department was established after the EPIRA, or the power reform law, was passed in 2001. This bureau is tasked to formulate plans and programs that would ensure efficient and reliable electricity supply.

The Power Bureau official said that if brownouts will indeed occur, it will most likely happen within the peak months of April and May.

The timing of peak and off-peak demand are crucial to the 10-year Power Development Plan (PDP) that the Power Bureau prepares every year. In turn, the energy department depends on the PDP to coordinate with other government agencies, and in this recent case, ask for more budget from Congress.

The PDP outlines the country’s energy status, supply and demand. It contains energy sources, dependable capacities, projected shortages, and committed power plants to address the shortages.
The Power Bureau computes the projected shortages based on the forecasts submitted by distribution utilities and the growth rates from the National Economic Development Authority.
On top of the peak demand, the Power Bureau adds a supply reserve margin of 23%.

2010 shortfall not new
That 2010 is expected as a critical period for Luzon is not new. The Luzon shortage--as well as the anticipated critical periods in Visayas and Mindanao--have long been identified way back in 2001.

In a press statement, Reyes explained that “the critical period is the year when existing generating capacity will not be able to meet the peak demand and the required reserve margin.”
The 3,000 MW shortage in the Luzon power supply is expected to start in 2010 and will worsen until 2017.
Again, Reyes’ statement failed to clarify that the shortage will not happen all at once in one year.
Revised projections
As early as February, experts have been asking DOE to realign its energy projections and include the effects of the global economic slowdown, which was triggered by a financial crisis in the US and Europe last September 2008.
“(The) DOE needs to realign projections because the shortage might not be 3,000 MW. The peak demand for Luzon is 7,000 MW and Manila’s peak is only 420 MW,” former energy secretary Francisco Viray told abs-cbnNEWS.com before news broke out of a possible energy emergency.

In 2008, the Philippines gross domestic product (GDP) plunged to 3.8% from a high of 7.1% the previous year. This year, economic managers project the economy to plunge further to a range of 0.8%-1.8%.

Since economic growth drives energy demand, new projections are likely to be reflected in the 2009-2018 PDP that the Energy Department's Power Bureau is currently completing.

Next year, the local economy was initially projected to improve to 2.6%-3.6%. The economies of rich and developing countries, however, foresee a recovery ahead, prompting the economic managers in the Philippines to review their previous assumptions. They are likely to announce revised economic projections soon. (Read: Growth targets for 2009, 2010 may be raised: NEDA)

The new PDP for 2009-2018 awaits the revised economic projections. PDPs are usually released by September or October.

The PDP that Reyes cited was based on the 2008-2017 version that had not reflected these slimmer growth rates.