Power conglomerate forewarns potential strain in supply, advocates for consumer protection measures
With the death knell ringing for the Naga Oil-Fired Power Plant, Cebu Electricity Rights Advocates (CERA) is ramping up the pressure for stronger consumer protections in the face of mounting fears that a power supply crunch could send electricity prices skyrocketing.
The 44.64-megawatt behemoth, along with its 0.44-megawatt Black Start Diesel Engine Generating Unit, will be silenced for good on March 31, 2025. According to Aboitiz Power, the aged diesel engines have been wrecking havoc on the plant's efficiency and reliability.
Baseload power, the bedrock of a stable supply, has been stretched past its breaking point amid the furnace-like heat, creating a chasm in power distribution yet to be filled by increased contracted power supply. CERA's chief, Nathaniel Chua, is pleading with Cebu Governor Gwendolyn Garcia to establish a Third Party Bids and Awards Committee (TPBAC) comprising representatives from government agencies like the Department of Energy, the Energy Regulatory Commission, and the National Grid Corp. of the Philippines, as well as private sector stakeholders, to ensure a fair, transparent, and legal selection process for power producers.
CERA insists that such oversight is key to thwarting sudden and excessive electricity price hikes, especially with the ongoing scorchers fueled by climate change. The group paints a grim picture, warning that if left unchecked, essential comforts, like air conditioning, could become unaffordable for many Filipinos.
The hike in prices is already being felt, as the shortage drives up costs in the Wholesale Electricity Spot Market (WESM), making it more expensive to run appliances like air conditioners and electric fans. However, many electric cooperatives in Cebu remain overly dependent on the volatile WESM, leaving their consumers vulnerable to price spikes.
Upping the ante, data from the Independent Electricity Market Operator of the Philippines shows recent surges in electricity rates for Cebu's electric cooperatives, ranging from a modest 2.73 percent to a shocking 95.5 percent.
While a TPBAC may not have all the answers to Cebu's power struggles, it could employ key strategies from competitive procurement to prevent monopolistic pricing and price collusion, endorse non-discretionary pass/fail criteria for bid evaluations, mandate firm pricing contracts to lock in predictable costs, and incorporate energy sector specialists to scrutinize proposals' technical and financial viability, thereby preventing approvals of contracts saddled with hidden cost traps leading to future rate hikes.
In theory, a TPBAC would harness the same cost-efficiency scale achieved in Vancouver (96.5% of contracts competitively awarded), applying similar principles to energy procurement during plant decommissioning phases. However, a TPBAC would likely need additional measures beyond standard procurement safeguards to address complex power sector challenges, such as fuel cost volatility and grid stability during transitions.
- The Naga Oil-Fired Power Plant, set to be decommissioned in 2025, is a 44.64-megawatt power behemoth that has been causing efficiency issues due to its aging diesel engines.
- Cebu Electricity Rights Advocates (CERA) is urging for the establishment of a Third Party Bids and Awards Committee (TPBAC), comprising government agencies and private sector stakeholders, to ensure a transparent and legal selection process for power producers.
- CERA warns that excessive electricity price hikes, driven by climate change and volatile power supply, could make essential comforts like air conditioning unaffordable for many Filipinos in Cebu.
- The shortage in power supply is causing prices to spike in the Wholesale Electricity Spot Market (WESM), making it expensive to run appliances like air conditioners and electric fans.
- Electric cooperatives in Cebu, overly dependent on the volatile WESM, are leaving their consumers vulnerable to price spikes.
- A TPBAC, if implemented, could use strategies such as competitive procurement, firm pricing contracts, and technical and financial viability scrutiny to prevent future rate hikes, drawing inspiration from cost-efficiency scales achieved in Vancouver.
