Power sector resiliency tested by Covid19
he lockdown measures introduced by the national and local governments have significantly reduced demand for electricity in the industrial and commercia l sectors. The global COVID- 18 pandemic has had a profound impact on the power sector, leading to a sharp reduction in demand, disruptions to the power supply chain, and heavy financial stress.
Estimates made by the International Energy Agency ( IEA) put the reduction in global electricity demand at 2.5 percent in the first quarter of this year, to peak at five percent contraction by yearend.
Domestically, dominant power distributor Manila Electric Company ( Meralco) reported a 40 percent drop, representing 4,516 megawatts ( MW) in March this year and further to 4,289 MW in April in peak power demand.
Despite the income strain caused by the falling demand and inability to collect from customers, Meralco initially of fered a 30- day payment reprieve to its customers for bills due from 1 March to 14 April. The Energy Regulatory Commission ( ERC) earlier approved that all consumption during the enhanced community quarantine ( ECQ) period — or bills covering March, April and May — should be paid not earlier than June 15. The payment reprieve was further extended up to the end of October by Meralco in response to calls from the government and the public sector with the economy still reeling from the impact of the pandemic.
Balancing industry sustainability
However, at the recent Senate finance subcommittee’s hearing, ERC chairperson Agnes Devanadera disclosed that the commission is draf ting a new advisory that would further extend the disconnection policies power distribution utilities ( DUs) and electric cooperatives up to 31 December this year.
“We are issuing, your honors, the advisory and even before, we have issued advisories... we have always advocated for the relaxation of the disconnection policies of our distribution utilities,” she said when queried by Senator Risa Hontiveros about the 31 October extension set by Meralco.
Devanadera added, “You’re right, Madame Senator, Meralco announced that their deadline is October 31, but how about our Christmas, how about our New Year.”
When further pressed by the senator if the ERC is mulling on lengthening the deadline to 31 December, Devanadera answered in the af firmative. She stated, “That is what is written in our draft now and we are following the spirit, the letter of the laws.”
There are, however, downsides to the regulator’s response that typifies mendicancy.
First, it discourages consumers to be responsible for their consumptions. There were even muted calls during the strict lockdown to waive the March to May power bills as a form of “subsidy from the government” or as a form of “assistance’ ( ayuda) from the power distributor.
Secondly, it does not address the liquidity problems faced by Meralco and the other electric cooperatives across the country because of the drop in demand, which will be further aggravated if cash flow is disrupted too. Indeed, COVID- 19 has induced a drop in demand like no other since the spot market was launched in 2006.
P2.69 B electric bill savings
From 16 March to 31 August this year, when its franchise areas were placed under ECQ, modified enhanced community quarantine ( MECQ) and general community quarantine ( GCQ), Meralco waived the Guaranteed Minimum Billing Demand ( GMBD), which resulted in P2.69 billion savings for its 87,728 business customers, both small and medium enterprises and large corporations from their electricity bills.
At least 57,939 business customers received a total P513 million GMBD relief when its suspension was extended to industries that were allowed by the Inter- Agency Task Force ( IATF) only partial operational capacity, or not allowed to operate.
Another 28,463 Meralco business customers received P272 million in GMBD relief after the IATF Guidelines and the Department of Trade and Industry expanded their Memorandum Circular for MECQ that allows industries with skeleton workforce to 50% operational capacity, or not allowed to operate.
Meralco president and CEO Atty. Ray C. Espinosa said the waiving of the GMBD was aimed at assisting local businesses, from small to large, while also contributing to the general efforts to jumpstart the economy.
By waiving the GMBD, Meralco hopes to keep the economy afloat.
We are issuing, your honors, the advisory and even before, we have issued advisories... we have always advocated for the relaxation of the disconnection policies of our distribution utilities.