Economic freedom, power reserves, and declining births

* BusinessWorld October 3, 2022.
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POWER RESERVES AND TRANSMISSION ISSUES

Consider these columns and reports in BusinessWorld:

1. “The way forward for the power industry” by Romeo Bernardo (Jan. 26, 2014): “… ensuring that the systems operator National Grid Corporation of the Philippines (NGCP) fully contracts what the system requires. The establishment of a reserve market has been long delayed.”

2. “Red Alert and EPIRA” also by Romeo Bernardo (June 13, 2021): “… the transmission line operator has not fully contracted firm power reserves. Where the system operator’s role is to procure reserves, much like procuring a genset for your home, to call on in a time of power crisis… NGCP over the past 10 years has been non-compliant with the rules… in the form of a lack of transmission lines, a lack of redundancies in our network, a lack of power reserves, and not meeting the IPO requirements under the law.”

3. “NGCP power reserve compliance inadequate, key legislator claims” by Angelica Yang (June 9, 2021). She quoted Senator Sherwin Gatchalian: “The NGCP (is) not contracting the right amount of reserves. Clearly, they are violating that policy… ERC (Energy Regulatory Commission) should now implement the policy. The foundation has been laid down by the Supreme Court that DoE (Department of Energy) produces the policy and ERC enforces the policy. In this case, since NGCP is not contracting, ERC should punish them.”

4. “DoE’s Cusi urges NGCP to meet reserve contract requirement instead of seeking Palace intervention” by Marielle Lucenio (Feb. 13, 2022): “The DoE requires the grid to have reserve power, known as ancillary services (AS) on tap committed under firm contracts. The NGCP’s position is that full compliance with the firm-contract requirement will ultimately raise power prices because of the expense involved in committing reserves. It said it instead proposes to tap a network of AS providers under firm and non-firm contracts.”

5. “ERC to NGCP: Explain failure to comply with reserve power rules” by Ashley Erika Jose (Sept. 19, 2022): “The ERC cited three sections of the DoE’s department circular which it said NGCP failed to comply. Section 4.2 requires NGCP to seek approval from the DoE on its ancillary service agreement procurement plan; Sections 7.4 and 7.5 mandate NGCP to seek the approval of the DoE on the terms of reference of the ancillary service competitive selection process (AS CSP); and Sections 7.1 and 7.11 require NGCP to complete the AS CSP within six months from the effectivity of the circular.”

As shown by the continuing yellow and red alerts in the grid until this year, it is obvious that the NGCP — the only remaining private monopoly nationwide — is abusing its power and showing continued insensitivity to the power needs of Philippine businesses and households. The new ERC leadership should go after them as the previous ERC leadership was too lazy to do its job....