Philippines electricity tariff decoded

By Chemrock

The Philippines’ electricity cost is one of the highest in the world. Is it really? And if so, what accounts for it?

The easiest way out is to put the blame squarely on Cory Aquino for mothballing the Bataan Nuclear project as the underlying reason for costly electricity today. Die-hard Marcos supporters still believe that the nuclear plant would have been the panacea for the Philippines’ energy crisis of the 1990s and the country would have cheap electricity forever and after. Cory is thus to be blamed for the high electricity tariff today.

The reality is, unlike many other countries, there is no subsidy in the Philippines electricity rates. Take away such subsidies, the comparison would have been more in Philippines’ favor, although it is nevertheless still quite expensive. To explain the high price, we need to unbundle the electricity bill.

I came across a study by Roberto S. Verzola, Jose D. Logarta Jr. (Viking) and Pedro H. Maniego, Jr. who compiled a cost composition of the electricity tariff in 2017 that provides some good insight.

The generation cost:

This is the cost of electricity the utilities procured from the generators. The major part of this is the fuel cost, be it coal or oil. Could our generation cost have been lower? The predicament lies in the coal plants.

Coal plants contribute roughly 43% of today’s power generation. Coal fired plants are considered the cheapest source for baseload requirements. However, this is fallacious because externality costs, life-cycle costs, as well as fuel and foreign exchange volatility risks have not been factored in. Purchase contracts more or less guarantee full cost recovery. With such risks taken out of their hands, coal plant operator profitability is assured.

Although most of the coal is imported, there is no need for coal plants to hedge themselves for fuel cost and currency fluctuations when all costs are passed on to consumers. There is also no need to invest in innovation or technology. The consequence is plant and management inefficiency. This translates into higher generation costs.

This chart compares Filipino coal plant efficiency levels with those of their Japanese counterparts. The difference is stunning. There were plans by JICA to assist in technology transfer, management technical training to improve operations, and funding to increase the efficiencies of these coal plants. Not quite sure if anything concrete came out of it.

The coal plant business model is a sure profit game when rates are based on cost-plus ROI. Coal plant investors will therefore protect their territory by all means. All the oligarchs involved in power generation are in coal except for the Lopez-owned Energy Devt Corp which operates natural gas plants. This backgrounder explains why Gina Lopez, ex-secretary of Natural Resource & Environment, was tough on coal mines, and why a strong coal lobby in Congress refused to confirm her appointment.

Today, the coal lobby is out to suppress the low-carbon path in the country’s energy plan.

Transmission cost:

This represents the cost of delivering the electricity from generation plants to distributors (micro-grids). It is the cost of operating and maintaining the national grid. Transmission assets (the transformers, sub-stations, high tension towers, cables, poles, etc) are owned by a government agency National Transmission Corp and operated by a concessionaire NGC (National Grid Corp). NGC is a private enterprise. Henry Sy is one of the major shareholders and State Grid Corp of China owns 40%. SGCC is a Chinese govt company. The Congress Minority Floor Leader Danilo Suarez has claimed that NGC concession disadvantaged consumers in that transmission rate was computed on operational cost plus cost recovery of old assets. His call for a Congress inquiry has fallen on deaf ears. If Suarez is right, then the transmission cost is high due to double recovery of old assets. It is hard to tell in the absence of data, but it is obvious to the naked eye that most of the transmission infrastructure is indeed decaying.

System loss:

This is an unavoidable cost in all electricity systems. When electricity flows through a conductor where there is resistance, power loss is inevitable. Technology used and aged assets impact the loss rate. The power loss is in the form of heat. The cost of systems loss is charged to consumers. This is reflected in the difference between actual meter reading and the load the consumer is charged with.

A World Bank report shows the Philippines has one of the highest average system losses in East Asia at 9.4 % in 2014, as compared to countries like Korea with 3.3 % and Singapore with 2.0 %.

In 2017, the ERC (Electricity Regulatory Commission) capped the rate for systems loss charged by independent DU (distribution utilities). It is to be gradually reduced from 8.5% to 5.5% by 2021, and co-operatives to about 12% by 2022.

Distribution cost:

At 26.34 % this portion seems very high to me. The distributor has 3 basic functions . First function is essentially a financial one. The DUs procure electricity from power generators on behalf of their customers the end consumers. Second is metering. Third is the last mile delivery of electricity to end consumers. It can be viewed as ownership, operation and maintenance of the micro-grid within their franchised territory.  It will be interesting to parse this figure further to the detailed cost. I suspect the gross margin is high and there is inefficiency due to no economies of scale. The ERC does not regulate what distributors charge.

The basis of the rate computation is absolutely complicated. It is a fertile ground for fiddling with figures that hide behind chunks of data beyond the technical competence of those outside the industry to comprehend.

In 2010 National Association of Electricity Consumers for Reforms (Nasecore)
claimed that Meralco, the country’s largest DU, overcharged customers by Php 14.2B over a span of 5-1/2 years. This issue remains a current hot topic of debate.

Subsidies:

No idea what this is.

Government taxes:

The amount of govt taxes seems pretty high. But what exactly are you paying?

  • Value-Added Tax
  • Local Franchise Tax
  • Indigenous Fuel Royalties
  • Imported Fuel Duties
  • Real Property Tax
  • Energy tax

With Federalism, embrace yourself for additional local taxes.

The DOE has yet to offer any rational polluter-pay scheme for GHG emissions. This can take the form of a carbon tax or a cap-and-trade regime. It is very likely something like this may be implemented in the future.

The RPS (Renewable Portfolio Standards) will kick off in 2020, but the DOE has stressed that this will be done in a way without additional costs to consumers. In simple terms, RPS requires DUs to have a certain mix of RE in their energy procurement. An RPS system requires a process of certification, verification, registration, tracking, a market place (REM – Renewable Energy Market) etc. Who is going to pay for the operation, administration and maintenance cost of such a platform? Expect additional costs.

Universal charges:

This is a uniquely Filipino burden. Each time you pay your electricity bill you will remember both Marcos and Fidel Ramos.

Napocor (National Power Corp) was once the most powerful govt Agency that runs the vertically integrated monopoly for the electricity industry. It accumulated massive debts from:

a. massive corruption during Marcos admin (especially the failed Bataan nuclear plant)
b. carrying out its mandate for electrification of off-grid places which often involves subsidies and costly generators like power barges.
c. buying out privately-owned power generation companies.
d. meeting it’s obligation under the ‘take-or-pay’ provisions of procurement contracts with IPPs (independent power producers)

The last ‘d’ is with complements from FVR. It is reminiscent of his ‘original sin’ in the MRT3 fiasco. In order to attract massive investments in energy infras during the power crisis of the 1990s, FVR admin entered into many sweetheart deals that contained ‘take-or-pay’ provisions. Napocor, as sole buyer of all power generated, had to pay for the contracted loads whether generated or not. In later years when the power crisis was over, Napocor had to continue paying for loads that were no longer generated.

Napocor’s debt was so huge that in 2000 it hit Php 801 billion which represented 25% of the entire national debt. The implementation of EPIRA (Electric Power Industry Reform Act 2001) brought some relief with the divestment of power plants by Napocor. However, it was still not enough to pay off all debts.

The cost of servicing of Napocor’s debts are transferred to consumers by way of the Universal charge.

FIT – Allowance:

This is a mechanism that offers incentives for RE (renewable energy) investment. The Feed-In-Tariff is used in many other countries in the world. In Singapore, we avoid feed-in tariffs. Basically, RE generation plants are paid a certain rate for the load they contribute into the grid. The cost of these incentive schemes is passed on to consumers. The moral argument is that if we want clean energy, we ought to pay for it. However, with RE, especially solar pv energy, reaching grid parity, the necessity for FIT diminishes. Furthermore, with the implementation of the Renewable Portfolio Standards, RE generators can look to the RECs (renewable energy certs) as another source of revenue.

FIT rewards the RE investors and punishes the consumers. The coal plant generators are the real CO2 emitters. They get away scott-free.

Conclusion:

Nobody is happy paying for high cost of electricity. It is easy to be emotional about it, and far too easy to play the blame game for political gains.  Atty Gadon’s recent blaming of Cory Aquino for the high electricity costs is one such example of someone who will do anything just to announce his candidature for the coming Senate election.  I wonder if Gadon reviews his electricity bills and understands what he is paying.

A national electricity system is one of the most complicated human devices. Many countries are in the process of modernizing their system from antiquated and inefficient state controlled vertically integrated monopoly to one that is open and market driven. The Philippines is no exception, It started the process of restructuring in 2001 under the framework of EPIRA. Much has been done and, in fact, we are at the tail-end of the modernization process.  I shall endeavor to write a follow-up blog on the status of the industry restructuring.

 

Comments
58 Responses to “Philippines electricity tariff decoded”
  1. karlgarcia says:

    https://opinion-inquirer-net.cdn.ampproject.org/v/s/opinion.inquirer.net/89330/meralco-asking-recovery-of-subsidies-paid-by-consumers-and-taxed-by-govt/amp?usqp=mq331AQJCAEoAVgBgAEB&amp_js_v=0.1

    Maybe this can help in explaining subsidies part of the bill.

    “ERC rules say: “Subsidizing End-User shall refer to the non-senior citizen and non-qualified senior citizen end-users who shall bear the discounts and adjustments extended to qualified senior citizen end-users.” This is computed and collected monthly. A Meralco household that consumed 253 kWh was billed P21.56 for this subsidy, which must have included the “Lifeline Subsidy” for households consuming less than 100 kWh per month and which we, the subsidizing end-users, also pay for. This is shown in the “Breakdown of Charges” in the monthly bill.”

    • chemrock says:

      Thanks Karl.
      In my opinion accounting for this type of subsidy in the manner indicated adds further complication to the computation of rates. Also it blurs the true cost of electricity and thus fail to assist in price discovery in the market.

      There is also another indirect subsidy that I know of. That is the low tax on coal for many years. I think under TRAIN2 tax on coal will be adjusted up. This has passed Congress. Don’t know whether it’s pass Senate and President has signed it.

  2. Micha says:

    chemp,

    1. Do you have a comparative chart to support the oft-repeated assertion that ours is one of the highest rates in the world?

    2. Outside the coverage area of Meralco, distribution in the provinces is actually maintained by electric cooperatives. Are the rates charged by Meralco cheaper than those in the provinces?

    3. I am totally skeptical of the idea that privatization is the solution to higher rates.

    • karlgarcia says:

      They say we are next to Japan in the region.
      I found a list of electrical prices in some selected countries, unfortunately it did not include the Philippines.

      https://www.statista.com/statistics/263492/electricity-prices-in-selected-countries/#0

      • karlgarcia says:

        For the Philippines alone

        https://www.kilovox.com/electric-rates-in-the-philippines

        .20 USD per kwh

        Based on the earlier link,

        Germany is the highest at .33 USD per kwh
        followed by some European countries.

        Japan is .22 USD per kwh

      • Micha says:

        Thanks karl. I’m too lazy to research this thing or maybe I haven’t really paid much attention to this local electrical “phenomena”.

        If the linked statistics are (is?) correct, coming right next to Japan, a first world country, our predicament seem not that runaway horrible.

        • karlgarcia says:

          Yes and more than ten European countries have higher electricity costs thsn Japan.

          If we could be nearer Indonesia’s .10 USD per kwh it would be great.I agree, it is not yet out of control.

          • chemrock says:

            @ Karl

            It’s very difficult to grasp the real situation from stand alone figure of the electricity prices. Many countries, such as Germany, they price in a high punitive cost to incentivise renewable energy development. They pay the price to take a low carbon path in their energy plans.

    • karlgarcia says:

      Thanks to you, the late RHiro and now Francis, I am enlightened of the pitfalls of privatization, but I still condider it part of the solution, specially if the powers that be would not make it part of the problem.

    • chemrock says:

      1. Worldwide cost comparative data is hard to come by due to difficulties of arriving at a single rate per country. Countries have different rate basis. I have not come across any clear cut chart on this. However, one gets a sense of Philippines competitiveness from these two :

      a. https://en.wikipedia.org/wiki/Electricity_pricing – $0.1822 @ kWh of Philippines does appear very high. Palawan appears to be extremely high. That is probably the reason why Palawan has turned to renewable energy and has goals to be energy neutral for the whole province.

      b. World Energy Council has a annual report called Trilemma Index Report. This report scores countries on 3 pillars of :
      – (i) Energy equity: Accessibility and affordability of energy supply across the population.
      – (ii) Energy security: Effective management of primary energy supply from domestic and external sources,
      reliability of energy infrastructure, and ability of energy providers to meet current and future demand.
      – (iii) Environmental sustainability: Encompasses achievement of supply- and demand-side energy efficiencies and development of energy supply from renewable and other low-carbon sources.

      Rating is on the basis of A to D with ‘A” for “Axecellent”. Philippines scored CCA for (i), (ii), (iii) respectively.

      On Equity — accessibility is good given the archipelago nature of the country. About 9% of the population has no access (with Mindanao having the highest). Affordability or pricing is your question. Philippines is ranked 96 in the world in 2017. Not good. What’s worse is from the 3 year data, we’ve been dropping for past 3 years.

      On Energy security – the ‘C’ score is no good. ranking was 52 in 2016 down to 70 in 2017. This has much to do with decentralisation and a balanced spread of sources of energy. In my opinion, the restructuring of the industry that’s been ongoing for 2 decades has not properly addressed this. For a country that’s the most at risk to national disasters, certain quarters in the government are still reviewing the resuscitation of the Bataan nuclear project.

      On environmental sustainability — surprise. Philippines scored ‘A’ and ranked number 1 in the world past 3 years running. However, do note that this relates only to countries which can take advantage of their renewable energy potential, such as Philippines and Iceland for their geothermal resources. Has Philippines grabbed this by the horn and made great headways? My follow up blog addresses this.

      https://www.worldenergy.org/wp-content/uploads/2017/11/Energy-Trilemma-Index-2017-Report.pdf

      2. Are rates in the provinces different from Meralco? Yes, absolutely. The nodal cost, grid and distribution cost varies. As indicated above, Palawan’s rates are way much higher than Meralco’s for NCR. Again I think the restructuring does not address this. With Federalism, it’s gonna be messy.

      3. Will privation lead to more equity? Privatisation leads to competition which leads to better prices. This has been the outcome experienced in countries that deregulated. However, I feel the restructuring will not lead to more competitive rates. I’ll address this in my follow up blog.

      • Micha says:

        “Privatisation leads to competition which leads to better prices.”

        Nope, market driven competition in the generation and distribution of basic utilities like water and electricity is not possible or even necessary. It will always gravitate towards monopoly or a duopoly at best. You cannot have overlapping distribution lines. Once those lines are controlled by an established operator, it is impossible to put up a competition. See the water distribution of the Ayalas and Lopezes in Metro Manila. Or the virtual monopoly of Meralco.

        Since these utilities are a strategic resource for the security of the state, I would maintain that instead of gifting the profit driven corporation with already laid out infrastructure, it should be turned over to gov’t control. Or at least actively supervised and regulated.

        • chemrock says:

          To the extent that it applies to Philippines, I agree. My blog on Philippines restructuring looks at this angle you mentioned.

          To the extent that it applies to other countries, prices improved for consumers. In Singapore our retail electricity rates are down 20-30% compared to regulated tariff after deregulation.

          • Micha says:

            Not familiar with the Singapore system. By deregulation do you mean there are now several electricity generation and distribution operators in Singapore? Or do you simply mean the removal of tariffs and taxes?

            If we’re most concerned about the cost there’s one very effective way to do it : government subsidy.

            Can the government afford it?

            Absolutely.

            • chemrock says:

              For me, subsidies is never be the way. The reason is very simple. There is no price discovery. Without price discovery, there is no way for efficient allocation of resources. A most important problem about subsidies is that when the time comes for it’s removal, for whatever justification, there may be riots in the streets, as evidenced in so many countries time and again. Indonesia, a country prone to such riots, was lucky. They removed subsidies when oil prices plummeted so the impact was hardly felt at the time.

              Assistance for the poor can take the form of other social safety nets.

              • Micha says:

                If the government can very well afford it (and it can), why fidget about price discovery? Water and electricity is a basic utility and access to it is a basic right. You just don’t allocate it in terms of who can or cannot afford. And anyway we’re just talking here about bringing down the cost where everybody, not just the poor, will benefit.

          • edgar lores says:

            *******
            Energy has been privatized in Australia and there is intense competition for customers.

            There are third-party websites that do comparisons of the rates of the various companies. They can help you decide on selecting for a new provider when you are moving house or if you find your energy bill to be too high.

            Typically, companies will offer attractive discounts to lock you into annual and bi-annual contracts.
            *****

    • chemrock says:

      @ Micha

      Came across this chart comparative done by Australian-based consulting firm International Energy Consultants.

      This chart cannot be taken at face value because different country price it differently. Eg the consultant has managed to exclude the subsidy elements from several of the countries. I’m not familiar with other countries, but to illustrate the difficulty of comparing, take the case of Singapore. The chart shows Singapore’s tariff in Jan 2018 at about US$0.1550/kWh. However, that was the official regulated tariff. Retailers’ prices would have been around US$11.625/kWh. But what consumers were actually paying depends on when they contracted their supply. Could have been a year or 2 earlier when the rates would have been different.

      Also note, it was Meralco’s rates shown here. Rates in other franchise areas are different, generally higher, with Palawan the highest.

  3. karlgarcia says:

    Instead of reducing the share of coal plants it actually expanded to 35.4 percent.
    Though renewables followed at 31.1 percent, hydroelectric dominates the share.

    It is good that San Miguel will convert some of their coal plants.

    Solar like any end of life projects problem would be disposal, others export their problems to willing buyers like our receiving of Canada’s and South Korea’s trash.
    Who will be willing to buy nuclear wastes?
    One day at a time would be the best aporoach to this.

  4. Micha says:

    The continued use of carbon fuel in light of global warming is pumping up the speedometer towards civilizational collapse or even worst, life extinction itself. There is no intelligent rationale for its continued use given what we already know about its effects and that there are abundant alternative sources for power generation. The only reason they don’t want us to abandon carbon is that corporations are making tons of money out of it. Or, in the case of the Saudis, it helps keep the royal structure in place.

    • chemrock says:

      The transition to low carbon energy has been an ongoing world project for quite some time. I agree it’s not fast tracked enough. But it’s a tremendous task that required international cooperation. However, much has actually been done and results are becoming more visible. Some have done more than others. Some are slackeys. I have a blog coming out on this. Do tune in and share your views in due time.

      • Micha says:

        It might just be a case of too little too late. Climate scientists have warned we’re already in the even horizon of climate change. Plutocratic greed has driven us into planetary suicide.

  5. edgar lores says:

    *******
    1. There was a question I read somewhere: What is the most important discovery made by men?

    2. There are many answers: fire, salt, writing, gravity, electricity, the fact that everything is made of atoms, and… women.

    3. I like all of them. And I do not think that one can live without any – except perhaps atomic theory. Well, perhaps not. Atomic theory led to nuclear energy which is a source for electricity.

    4. But there is a good case to be made for electricity. Modern life would be impossible without it.

    5. From the time the alarm clock wakes you up in the morning to the time you turn off the lights to go to sleep, electricity surrounds you. I shall resist the temptation to list all the things in our daily lives that require electricity.

    6. I will just mention the four things I love best and would not be able to do without electricity: interacting with the world through the computer, reading on my tablet, eating, and listening to music.

    6.1. Well, I use gas for cooking, but I use electricity for the electric kettle, the rice cooker, the microwave, and the induction oven.

    6.2. And how would I manage the house chores and yard chores without electricity? The vacuum, the washing machine, the lawn mower, the hedge trimmer. All have electrical motors.

    6.3. Pretty soon I’ll have a Tesla. No, that’s a dream. But the car has a battery and an electrical subsystem.

    6.4. Just imagine if I had a feet-driven computer like the sewing machines of our parents’ time.

    7. Money may make the world go round but electricity “makes marvelous things happen.”
    *****

    • chemrock says:

      The good, the bad and the ugly.

      You have listed a fairly many Goods. Some of the goods we can dispense with. Like the electric alarm clock, good old fashioned hand wound clocks will do. Missionary electrification is still ongoing. A huge percentage of people still get on with their lives without electrification. Whether it’s good for them or not it’s not for us to say. Take the case of the US missionary recently killed by islanders in an Indian island. The islanders have no modern human contact, they dont welcome tourists. They get by with no electricity, happily I’m sure, in their ignorance. The intelligent world makes a mess of the Earth. The unlearned world lives within the bounds the nature.

      How about the bad? There are just as many of that I’m sure. The electricity that went into producing weapons, or power the casinos.

      And the ugly — the poor folks that live near coal fired power plants that generate the electricity suffer health issues in silence. The oligarchs that enrich themselves will do nothing for those folks. This makes Micha mad.

  6. karlgarcia says:

    The problem of stranded assets. Shifting to renewables I f course will make some existing and future coal power plants to be unused, meaning a shift to renewables may not necessarily eliminate those stranded assets and we will continue to pay for them?

    “Philippines: Stranded Coal Plant Assets and the Energy Transition

    A new, groundbreaking report by Institute for Energy Economics and Financial Analysis with the Institute for Climate and Sustainable Cities shows existing and future coal plants in the country are a losing gamble for Filipinos:

    All proposed and committed coal plants are projected to become stranded assets. Many currently in operation are already in various stages of stranding.
    Retail competition is leveling the playing field for affordable power.
    Liquefied natural gas (LNG) is encroaching into baseload supply.
    Renewable energy (RE) has become cheaper and more reliable. In many areas, RE has become the least-cost option.”

    • karlgarcia says:

      Link for the report and some more important points from the same.

      http://icsc.ngo/strandedcoal

      “Philippines is heavily but needlessly dependent on imported coal

      The country needs to import 75% of its coal supply. Most of the coal sourced domestically is low-grade.
      Coal prices soared last year by 60%, showing how economies like the Philippines are at the mercy of price volatility and uncertainty. Price increases are automatically passed through to power consumers.
      Despite this, coal comprises 48% of the Philippines’ energy mix.
      The country already has a total of 7,419 megawatts (MW) of coal-fired capacity. It has 10,423 MW of coal expansion in the pipeline, worth US$20.8 billion, all of which run the risk of being stranded assets – meaning they will not fully deliver on projected economic returns.
      Philippine Power Purchase Agreements (PPAs) on coal-fired power plants typically go for 20 years, qualifying them clearly as looming stranded assets.
      Filipinos can and should pay lower electricity bills

      The Philippines pays among the highest electricity prices in Southeast Asia. It also has the lowest per capita GDP and kilowatt per hour consumption.
      This has been attributed to several factors, mainly: (1) imported fuel and subsidies; (2) surcharges on electricity; (3) archipelagic geography, leading to lack of scale economies in generation, transmission, and distribution; and (4) past government investment and regulatory errors, plus massive red tape.
      If regulators and lawmakers fail to consider the stranded costs of thermal plants, especially coal, electricity rates will rise further relative to those of competing countries.”

  7. Chempo, many thanks. Some unsorted comments:

    1) Karl mentioned an article where archipelagic geography is mentioned as a major issue in the Philippines. I read somewhere else that the Philippines do not have a full archipelagic network yet. What does that mean? In Europe it is relatively easy for Germany to buy electricity from French atomic reactors when there is peak consumption over here. That is because there are a number of EU-wide electric networks where one can pass the electricity over high-tension wires and the like. Once I watched a documentary on how the oommand rooms of electric corporations work and anticipate major events like soccer matches, making sure that additional electricity is there when needed – because electricity has to be consumed when generated, or stored but there are as yet few batteries that store such high amounts of electricity. One can do it the Austrian way and use electricity to pump water up into hydrolectric dams that create electricity later, but just like huge batteries that is lossy due to the laws of thermodynamics. Anyway, to make a long story short, the Philippines still has to connect its grids in such a way that Mindanao can help Luzon with current.

    Germany is currently lagging a bit in its project to replace atomic energy completely. The current Autobahn that will bring wind energy from the North Sea and Lower Saxony as well as hydroelectric power from Bavarian mountain valleys all over the country is not finished yet. But that goes further.

    It all depends on how much capacity the lines have. Some years ago there was a short blackout in Munich – just 20 minutes – because a major line supplying the city was cut for some reason. Backup was quick but imagine a modern city being hit at dark 7 a.m. on a winter morning.

    2) a highly efficient aspect of the German model are municipal utilities firms owned by the cities. They are private but not profit-oriented. They can decide faster than government offices can, but as everything (current, water, drainage, heating, natural gas.. in Munich even fiber-optic Internet, public transport and public swimming pools that take are heated by the same plants that heat housing) is controlled by one firm, things run cheaper than when many utilities do different things – and besides digging up sidewalks etc. can be done in one go and not first for water, then for electricity, etc.

    Edgar mentioned that electricity is one major amenity we enjoy. Those of us here who have engineering or IT backgrounds will all appreciate what effort it takes to make anything that seems self-evident work for the end user. Whether it is a computer network, a database application, or Google itself. A Google manager wrote in Communication of the ACM (Association for Computing Machinery) how google conducts “fire drill” like exercises (which employees don’t necessarily know are exercises) to simulate how major lines break down and to test / improve emergency response. There is a similar complexity I saw in the documentary about the “electricity command center”:

    Recovery after disasters is also a major factor. How many power lines in the Philippines are still above ground and have to be put back each time after a typhoon? Would it probably be cheaper in the long run to put the below the ground? How vulnerable are power plants? Etc. etc. etc.

    3) electricity is privatized in Germany. Water is NOT privatized everywhere, which is a good thing.

    Privatization can lead to long-term deterioration of service due to excessive, manic cost-cutting. The British rail system is the worst example, although the German rail system has deterioated a bit also. By contrast, the Swiss rail system still runs perfectly on time. Privatized Berlin tap water sucks while Munich tap water is excellent, no need for bottled water. They even make sure not too many cows graze on the fields near the aquifers where Munich tap water comes from, because of their urine. Privatization can work well if the regulatory bodies are strict, but I doubt that it the case in the Philippines. More likely, they are powerless in a country where nearly everything is privatized. By comparison, the USA might seem social democratic (yikes!) and Singapore nearly “communist”.

    • If Chinese firms own power transmission in the Philippines, that is of course relevant to national security. They can just turn off the power, something the Lopez family allegedly did to Marcos political campaigns, getting Ferdie real mad to show them who had the power..

      • Do you guys have micro-grids over there in Europe, Ireneo?

        I saw a documentary on micro-grids in India, essentially barangays stand up or source their electricity from small solar farms in areas not included in the grid.

        Over here, not so much micro- but mini- grids but mostly up north (again areas prone to being off the grid, ie. during disasters, etc.).

        I know Canada has micro-grids, that are connected to the grid, essentially these micro-grids save folks money, very much the same way individual homes with solar panels (but no battery storage) are connected to the grid here in CA.

        Surplus goes to the grid, thus saving customers money, while also making the grid more robust in case of disasters. Win-win.

        The Philippines supposedly have micro-grids in the works now, but where?

        Philippines plans $97 million for micro-grid based rural electrification

        Amid rising interest in micro-grids in Southeast Asia, the Philippines’ National Electrification Administration is readying a policy to support electric cooperatives to install microgrids and solar home systems. The administration is planning to propose a 4.9 billion Philippine pesos ($97 million) budget for 2018, the bulk of which is intended to be used for long- and short-term loans for capital expenditure for micro-grids³. Several companies, including Japan’s TEPCO in a cooperation with a grant program by the Japan International Cooperation Agency (JICA), are already exploring renewables-based micro-grid projects in the island nation, according to media reports. Solar Philippines, a local developer, and manufacturer, announced on August 23, 2017 that it is planning a 4MW solar + 8MWh storage + diesel micro-grid on the island of Mindoro.

        ______________________________

        Also, chemp , we have coal (or any other dirty) power producers as lobby here too, they’re responsible for keeping much of NV, AZ, NM and Florida stunted in solar. While NY, CA, Washington and Oregon, are doubling and tripling their solar.

        • https://www.greenbiz.com/article/small-town-germany-becomes-testing-ground-smart-grid

          A small German town in southern Bavaria is participating in an interesting experiment proving that a high-renewables future is viable. Wildpoldsried (pop. 2,600) currently produces 500 percent more energy than it needs through renewable energy systems, and sells the surplus power back to the grid. Although this is celebrated as a huge success in many circles, it’s not without its challenges, including how to integrate such a large local surplus of renewable energy into the greater grid while maintaining network stability. Which is why regional utility AÜW and Siemens chose Wildpoldsried to test out a smart grid that automatically stabilizes the power network..

          ..The key to the smart grid is a self-organizing automation system called SOEASY, which balances supply and demand to keep the grid stable. It is IRENE’s brain, so to speak. SOEASY considers weather, electricity prices, power quality and other factors when deciding whether to send electricity into the grid or to storage. It’s actually more complex than the name makes it sound. SOEASY contains five software modules — the personal energy agent, balance master, area administrator, network transport agent and energy police.

          Personal energy agent — Every “prosumer” in the town has a personal energy agent. This small device allows the energy producer to dictate how much power he or she wants to sell, at what time and at what minimum price, in 15-minute intervals. It is, in some sense, a distributed energy resource marketplace on the scale of one town embedded in a far larger grid.

          Balance master — The balance master is installed at AÜW and decides which personal energy agent offers it will accept to cover demand in the grid. It can plan adjustments up to a day in advance, and takes into account different parameters such as weather changes.

          Area administrator — The area administrator helps AÜW maintain network stability if too much energy is being fed into the grid. The area administrator can modify the input from different sources via commands to their personal energy agents, can send energy to storage, or can adjust the voltage through the variable transformer.

          Network transport agent — The network transport agent collects data from the energy producers, consumers and the grid and supplies it to the area administrator, which intervenes if maximum voltage is exceeded, and to the balance master, which decides what power can be accepted without overloading the grid.

          Energy Police — The energy police makes sure that all energy producers supply the power promised by their personal energy agents and that no power is illegally siphoned off..

          https://www.greenbiz.com/sites/default/files/styles/gbz_article_primary_breakpoints_kalapicture_screen-lg_1x/public/images/articles/featured/solarvillage_laurieguevarastone_shutterstock.jpg?itok=SsYO6s3C&timestamp=1415658050

          • https://www.dw.com/en/feldheim-germanys-renewable-village/a-18466800

            ..The newest and largest of the turbines alone is on track to produce 9 million kilowatt hours of electricity per year: more than enough to power the entire village of Feldheim several times over. The village wind farm produces so much renewable energy that 99 percent of what it produces is sold on the energy market.

            Building on the wind farm’s success, the farming cooperative has diversified its business. In the face of falling crop prices and rising energy costs, they decided to build a biogas plant. That facility now turns maize and cereal silage – plus a mixture of pig and cow manure – into methane, which in turn heats and powers Feldheim’s homes…

            ..Feldheim is also currently installing a massive battery that can store enough electricity to power the village for two days. It’s due to be switched on this fall..

            • http://www.energy-democracy.net/?p=1067

              When the nuclear power plant at Chernobyl exploded in 1986, a cloud of radioactive gas spread over much of Europe, including a town in the South of Germany at the border of France and Switzerland. In Schönau, in the Black Forest, the event sparked a response that would evolve into a cooperative that supplies 170,000 citizens with electricity, committing itself wholly to the phasing out of nuclear energy worldwide.

              A small group of concerned citizens started organizing energy conservation competitions, reactivating small water hydroelectricity power plants and installing solar power facilities. The local power grid operator, selling as much electricity as possible, including nuclear power, objected to their activities. So the public interest group attempted to obtain the concession for the local power grid themselves. Two spectacular local referendums later, this band of determined citizens was finally granted the license to take over the power supply.

              The citizens founded Elektrizitätswerke Schönau (EWS), a cooperative utility company [1] providing the local community with renewable energy. Since the liberalization of the European power markets in 1998, EWS has become a Germany-wide electricity supplier. Besides producing energy from renewable sources, they are also politically active, advocating for the Energiewende (energy revolution) and helping other communities to do the same. Since 2009, EWS has been an official cooperative in which everyone can play a role and in which every member has an equal say.

              The Ukrainian town of Chernobyl lies 2,000 kilometres from Schönau. The parents in this small conservative town were advised not to allow their children to play outside and to only eat preserved food. There were several nuclear power plants in the region, much closer than Chernobyl. Parents realized an accident with catastrophic consequences in close proximity was conceivable. They named themselves “Eltern gegen Atomkraft”, parents against nuclear power. They were disappointed and angry: governments had failed to acknowledge the issue and everything continued as before.

              The parents began by getting informed about nuclear power and alternative energy sources. They interviewed the experts and collected information; but how to recruit more supporters? In order to move in a more positive direction, they changed the name of the group to “Eltern für eine atomfreie Zukunft”: parents for a nuclear-free future. They took every opportunity to draw attention, appearing at and holding local cultural events. They even formed a cabaret group. The easiest way to boycott nuclear power, however, lies in saving electricity. Therefore the group called an energy conservation competition. Then they finally managed to reach the people and support increased. This did not go down well with the local power grid operator, whose business model relied on selling as much electricity as possible, including nuclear power..

              • chemrock says:

                Irineo
                Thanks for the many cases cited. I especially like the Munich municipal utility. Non-profit state agency to me is the best model for utilities. Unfortunately, it is a rarity to find such state agency running efficiently, effectively and sustainably.

                I also like the SOEASY system you mentioned. Technology has a critical role to play in the business of electricity due to the fact that it is a commodity with a difference — you can’t inventorise it, and supply has to equate demand. There are some methodology of storage, as you mentioned, pumping water up to a higher level to be used at a later time to drive turbines. There is also another — using salt to retain the heat from the sun, and then using this heat to generate steam to drive turbines. Spain is way ahead in this technology. In Singapore our govt has just contracted out 2 projects for this salt energy storage technology.

                “Privatization can lead to long-term deterioration of service due to excessive, manic cost-cutting. ” This is generally true. The London rail system you mentioned is a good example. Privattization can only have a chance for social good if there is competition and a competent regulator.

  8. popoy says:

    Distant memory of OOT about the BNPP. In one of the AFP- CGSC (Gen E Abenina could had been the Class President) and as part of the Development Administration Module training staff, the class had made a field trip to Bataan to visit the BNPP and the Bataan Economic zone. What I remember is that it took 28 days daw (kono) of continuous concrete pouring to build the Plant’s white egg, that tests and experiments were being made to the sea water close to the plant on how the extreme temperature will affect or kill sea plants and organisms as the water will be used in the cooling process, we gathered no useful information about how the Mindoro earthquake fault will affect the plant. We also visited the factories of the economic zone, the products for exports may be, were impressive enough. It struck me that the eco zone was some kind of youth Shangri-La as we observed young, happy, and very healthy young men and women emerged from buildings at the end of the day.

    As to whether the BNPP would have been any good to the country, there is no question that BNPP had done enormous good to some people who made money out of it.

  9. karlgarcia says:

    Time for a morning laugh.

  10. popoy says:

    Two other OOTs comes to mind resulting from reading the news; two it seems are very real eche bucheche snoozers.

    One: in Oshawa, Ontario, Canada the General Motors Plant will be closed that will render jobless thousands of workers. The disastrous impact to countless families seems incalculable made worse by timing it during the Christmas Season. As expected, many people, even among those not affected by the closure of the GM Plant are very angry and are demonstrating their anger.

    The usual eche bucheche gives rise to questions: (1) Can any corporation in any part of the world just close any factory or plant for their reasons? (2) Do corporations have the ABSOLUTE right or power of closure without due process for the workers? (3) CAN any court of justice STOP the closure of any corporate plant? (4) For the possible extreme harm of the planned closure can the corporate owners and managers be arrested, tried and placed behind bars if the closure was illegal and will undermine the economy of families and towns or cities. CEOs and underlings it has been reported before to have had massive salary raises for downsizing their labor force by several thousands.

    Two: Also in the news of eche bucheche is the on going exchange of barbs between the church and its faithful and not so faithful. In high school I learned the Catholic Church will EXCOMMUNICATE any Catholic person who transgresses its teachings and practices. Excommunication was said to be very effective in shaming and punishing faithful recalcitrants. We (classmates and I) do not understand why not allowing to have holy communion can be a powerful punishment.

    An eche bucheche of modern times could be faulty analogy by asking such question: if fugitives from civilian justice can be controlled and punished by the mere cancellation of passports, why can’t the church aside from toothless excommunication cancel the baptism (voiding ab initio baptismal certificate) of the errant faithfull. If the errant faithfull had committed the heaviest of mortal sins, the baptisms of all children and descendants may likewise be cancelled.

    But there’s a palusot in every eche bucheche. One can easily be baptized in another congregation, or just be declared an atheist. One and the immediate relatives perforce only has to undergo the red tape and paper work required in transacting business with any government.

    TSoH comments hopefully will help in clarifying the above eche bucheche, este blog.

  11. Andres 2018. says:

    Its time to go solar. There is a theory that the more a civilization utilize the power of its sun the more advance that civilization is.

  12. NHerrera says:

    Nice perspective on the cost components of power rates and the associative problems that run against efficiency and minimizing power rates.

    Rationalizing all these — from power generation to distribution and taxes, etc. as well as power mix, environmental impact and availability — is important because assuming the Build Build Program through Chinese and Non-Chinese loans is successful, it does not bode well that power is unreliable and power rate is high when it can realistically be lowered. If some manufacturing sector is found to be the good area to go into, it will not do if the power system continues to be planned and implemented nationwide as it is now. And of course, federalism aside from the criticisms already made on the idea, will not help in this power system rationalization, as noted in the article.

  13. karlgarcia says:

    I tried avoiding mentioning the paid political ads of Imee Marcos, but she is proposing to implement nationwide what is done in Ilocos Norte, having wind farms,solar and soon hydro.

    She is selling herself as having all the solutions with her carry slogan. She is even using recycled proposals like on what to do with the coconut industry.

  14. NHerrera says:

    OT

    Our favorite TSH reference, Richard Heydarian, a political science professor, used interesting phrases regarding the dilemma smaller powers like the Philippines have with respect to China:

    * Strategic Resignation
    * Strategic Solitude

    The first — Strategic Resignation — relates [I am paraphrasing] to a way of dealing with the powerful China which is bulldozing its way over the small powers in the area it considers its sphere of influence.

    The second relates to Heydarian’s observation that in the aftermath of the Arbitration Ruling favoring the PH, no major power foisted its strong comments until later and in softer tones against China. Hence the choice of Duterte in view of this Strategic Solitude:

    to call for a “soft-landing” in the West Philippine Sea. If we were “meek” and “humble,” the President proudly advised, we would receive Beijing’s “mercy.”

    Two years on, however, what we see is largely the unfulfilled promise of Chinese mercy. Over the past year, China’s militarization of the South China Sea disputes entered a new and dangerous phase with the deployment of surface-to-air missiles (SAMs), anti cruise ballistic missiles, electronic jamming equipment and a whole package of advanced military assets to artificially created islands.

    Heydarian further writes:

    As for China’s $9-billion pledge of infrastructure investments and development assistance in the Philippines, the backlog is striking.

    Among the 10 big-ticket projects in the pipeline, only one so far, the Chico River Pump Irrigation Project, has cleared the preliminary stages of implementation. And among the 29 deals signed during President Xi Jinping’s much-vaunted visit, only two, namely the implementation agreements on feasibility studies for the Panay-Guimaras-Negros Island Bridges Project and the Davao City Expressway, evinced some modicum of advancement.

    The rest were mostly memorandums of understanding, frameworks and letters on already identified projects. Let’s just hope that we haven’t been taken for a ride, and that time will sort out everything.

    https://opinion.inquirer.net/117744/dutertes-china-dilemma

Trackbacks
Check out what others are saying...
  1. […] via Philippines electricity tariff decoded […]

  2. […] The first part (Philippines Electricity Tariff Decoded) dealt with the high electricity tariff which showed that politics, corruption and competency issues […]



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.