DEBIT CREDIT

Part two

People talk about risks—but has there been a recent study on the advantages and disadvantages of the use of nuclear plants after considering improvements in technology? There is a risk—true, but risks abound everywhere in any technology to be considered.

There may even be a greater risk in the political maneuverings to gain control in the power sector. At this time, this nonstop attack on electric Power Industry reform Act (ePIr A) and National Grid Corp.of the Philippines (NGCP) is a good example of political risks in business. There may be legitimate concerns, but are these being addressed properly?

So far, only Sen. Escudero seems to appreciate the need to temper the emotions of other politicians because we may be missing the bigger picture. How can we entice investors to put up additional capacities if the political risks can wipe out their investments once a new political administration takes over.The red and yellow alerts can be caused by anything—accidents or acts of sabotage to transmission facilities and by the consistent lack of available generation capacity.

For the most part, this lack of capacity has been the main reason, but the blame is intentionally or unintentionally attributed to NGCP for its alleged failure to contract the required ancillary capacities. However, the lack of ancillary services can also be traced to lack of capacity as well. After all, our energy demand and ancillary requirements come from only one source—the capacity market. If there is not enough margin (dependable capacity less peak demand), where will the ancillary come from? Furthermore, not all capacities included in the margin are eligible as ancillary service providers.

Question is, under EPIRA, who is responsible for the build up of capacities? Section 37 of EPIRA very clearly points to the Department of Energy. While it is true that the systems operator is responsible for acquiring ancillary services, it is also assumed that there is adequate capacity to serve both energy demand and reserve requirements. Section 37(i) in particular states that the powers and functions of the DOE includes

“Develop policies and procedures and, as appropriate, promote a system of energy development incentives to enable and encourage electric power industry participants to provide adequate capacity to meet demand including, among others, reserve requirements.”

We have been in the same situation for a long time now. Stop finding faults and be Constructive, rather than putting the blame on others, or, even take back transmission operations—something planned and approved by previous administrations. These are also covered by a concession agreement and a congressional franchise. Even for the sake of argument that there were flaws in the agreement, are these such that we can no longer move forward without changing the players? If there was a crime involved, then by all means, bring a case forward. Otherwise, can we not work together and fix whatever is necessary to achieve a common goal?

To be continued.

Alfredo Non is a CPA by profession and a former Partner at SGV & Co. He served as Commissioner of the Energy Regulatory Commission till he completed his term in 2018. He also served as Director and Executive Officer of several private companies, and a former professor in Financial Management at the Ateneo Graduate School of Business.