On electric cooperative cases at the ERC, renewables, and food inflation

Isaw a copy of the “List of distribution utilities with violations under RA 9136 as determined by Energy Regulatory Commission (ERC) in 2023.” Some 30 electric cooperatives (ECs) and private distribution utilities (DUs) were listed there. The violations are generally about “The generation rate charges to consumers are beyond its load weighted average NPC TOU rates contrary to Section 2, Article II of the OU Rules.” The Orders to them are to “Submit Hourly Energy Purchases (in excel format) and copies of power bills,” and to “Immediately Refund all generation rate collected in excess of the load weighted average NPC TOU rate in Luzon from (period covered).”

Accompanying this piece is a list of the ECs and DUs with longrunning cases. Most ECs have cases covering shorter durations, from 2020 to 2023.

I got curious about the San Fernando Electric Light and Power Co. (Sfelapco) and the huge amount of its reimbursement order: P654.4 million + P1,7 billion = P2.4 billion! Among the reports I saw about this was this one: “CA junks P1.4 billion refund order vs Pampanga power firm” (Inquirer, Jan. 27). It said that the Court of Appeals (CA) Special 17th Division declared that the ERC’s order to refund the P2.4 billion “lacked legal and factual basis and that it violated

Sfelapco’s right to due process, among others.” The CA added that the DU was not given the “opportunity to ventilate matters involving the orders of refund adjudged against it.”

I checked the other ECs and DUs — they had similar violations: no approved or un-acted

power supply agreements (PSAs). I am no fan of ECs and their Congress-granted geographical franchise monopolies, where captive customers have no choice but to pay whatever rates they impose. But I remember that under the previous ERC leadership, there was a huge backlog of un-acted, and hence un-approved, PSAs, so ECs/DUs and their old genco PSAs proceeded with the old arrangements and prices. And after many years, here the ERC comes penalizing ECs and DUs for unapproved PSAs that it itself did not act upon on time. So, it seems that at fault here was the ERC under the previous administration.

Last week, on Feb. 22, I attended the “Business to Business Matching Event to Support Energy Transition” (B2B SET) conducted by the Department of Energy (DoE) and the United States Agency for International Development (USAID) at the Grand Hyatt Hotel BGC. Among the speakers were DoE Secretary Raphael PM Lotilla, Ryder Rogers of USAID Philippines, DoE Undersecretaries William Fuentebella and Rowena Guevarra, ERC Chair Monalisa Dimalanta, officials from the Department of Environment and Natural Resources, Board of Investments, National Irrigation Administration, and the Asian Development Bank.

What struck me most were the huge planned capacities for solar (58.1 gigawatts or GW), onshore wind (254 GW), offshore wind (178 GW), plus ocean (170 GW). Wow! Compare that with the total installed capacity of only 28.3 GW in 2022, of which solar was only 1.5 GW and wind only 0.4 GW.

I follow and monitor monthly inflation data, both national and global. Among the things I notice are that overall inflation, even in rich countries, remains at high levels and that food inflation is much higher than overall inflation, and this coincides with rise in solar and wind capacities in many countries.

Foremost among the countries that have these trends are those in Europe. For lack of space, I have limited myself to only five European Union countries plus Australia and Japan in the data table here.

As more solar and wind capacity is added, food inflation rises, and total power generation either flat lines or declines. This is because solar and wind are priority dispatch in the grid, whether in Europe, America or Asia. So, more coal, gas, and nuclear plants are forced to retire because they cannot earn 24/7 anymore, or they are being forcibly closed earlier, and they are the real electricity producers, not wind/solar.

Let us look at GDP growth in Europe in 2023: Spain 2.5%, France 0.9%, Italy 0.8%, the UK 0.3%, and Germany -0.1%. They are technically crawling, if not contracting like Germany, Poland with -0.1%, and Ireland with -2.1%.

The Philippines should not follow the Europe path of deindustrialization and degrowth economics in pursuit of the amorphous and weird goals of “net zero” and “decarbonization.” We should prioritize our people’s desire to have more jobs, more businesses, more stable and cheaper electricity, more industrialization and prosperity. The gung-ho plan to inject more intermittent wind and solar into the electricity grid should be abandoned before it is too late.

BIENVENIDO S. OPLAS, JR. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation. minimalgovernment@ gmail.com