Pending PSAs shackle 4,500MW of power capacity additions

The main reason of the rotating brownouts these summer months had been the 4,500 megawatts (MW) of expected power capacity additions getting shackled at commercial operations and implementations because of delayed approvals on their power supply agreements (PSAs), the Energy Regulatory Commission (ERC) said.

That was also forthrightly admitted by ERC Chairperson Agnes T. Devanadera, with her indicating that the Commission has been “understaffed” and cannot keep pace with the tedious load of approving power supply deals.

“We have arrived at the number of 85 PSA cases that have not been acted upon... if we look at those that have not been acted upon, especially the new ones, really we have 4,500 megawatts,” the ERC chair stressed.

She further added of the lack of manpower. “We only have 14 staff to work on these PSAs – either they have the motions for reconsideration for the final authority that the ERC has issued and the others have been granted with provisional authorities or interim relief.”

The 85 power supply agreements, it was noted, include not just the existing plants but even committed power projects that should have been shoring up the country’s power supply – not just in the short term but up to the longer term horizon.

At this stage, even the power generation companies and the business sector in general have been prodding government to focus on inviting investments for new power capacity additions that could ensure the long-term electricity needs of the country.

This was voiced out by the Management Association of the Philippines (MAP) in last week’s Senate hearing and similarly indicated by the Philippine Independent Power Producers Association, Inc. (PIPPA), the association of the power generation firms in the country; as well as the biggest power utility firm Manila Electric Company.

MAP Vice Chairman on Energy Ernesto B. Pantangco said the country already “lacks the necessary capacity” that will ensure long-term electricity supply amid growing demand due to brisk economic activities and the bullish infrastructure development build-up being pushed by the administration.

Meralco Vice President Jose Ronald V. Valles similarly indicated that the clear message being set out by the forced outages and the tightness of supply is the need for capacity additions that the system can rely on; while propounding that what the country must strive on to achieve is “overcapacity, because that will drive prices down.”

But investors complain of the recurrent delays they have been encountering in project implementations, not just on PSA approvals but in permitting processes – which they claim have been adding to their costs of doing business.

“No project developer wants delay. We avoid it at all costs. In putting up a plant, we have our financial projections, which take into consideration the time where we expect to operate and the licenses, which we need to operate properly in accordance with the law,” said Atty. Anne Estorco-Macias, president and executive director of PIPPA.

She further averred “if there is any delay which will result to a late operation, we pay the cost. This is an opportunity cost for us investors, which we do not want at all.”