Effective Al Energy Secretary Alfonso Cusi takes pragmatic approaches in solving problems. ROY PELOVELLO

">Effective Al Energy Secretary Alfonso Cusi takes pragmatic approaches in solving problems. ROY PELOVELLO

The huge spike in the cost of electricity in 2013 as a result of a one-month shutdown of the Malampaya natural gas facility will not happen again by being prepared.

This was revealed by Energy Secretary Alfonso Cusi during the recent “Straight Talk with Daily Tribune,” the online live interview program aired over this publication’s Facebook and Youtube pages.

Cusi also shared that the Department of Energy (DoE) is currently reviewing the signed contract regarding the power facility.

“When I came into the Department of Energy, we were surprised about a maintenance shutdown in 2017. The result was an upswing in the price of electricity, since power plants with a total capacity of 3,000 megawatts are dependent on Malampaya,” he said.

There was no shortage in electricity since the power plants shifted to the use of conventional fuel which cost more and which was passed on to consumers.

“If I remember it right, at that time (in 2013), P10 billion in additional costs was passed on,” he said.

“So, I asked why did that happen? Was the maintenance scheduled? And then suddenly in 2017, there was another interruption. I have to ask again, why?” he added.

Cusi said he asked the operators of the Malampaya field when the next scheduled maintenance would be: “We wrote Shell, Chevron and they said maintenance was scheduled in October.

The DoE in 2016 reactivated a dormant power plant to augment electricity supply in Luzon.

“I told them let’s prepare already, so we won’t be surprised. I wanted it planned to prevent an upswing in prices. Then I asked them what was the provision in the contract regarding maintenance? What is your responsibility in the supply of the alternative fuel and the need to pass on the cost to the public,” he said.

“We wanted to head off a potential problem. So, let’s prevent that and the people suffering by doing the necessary preparation study,” Cusi said.

Service Contract (SC) 38 was the license that allowed the exploration of the Malampaya gas field in northwest Palawan. It will expire in 2024 with an option to extend that can be applied for with the DoE.

Shell Philippines Exploration B.V. (SPEX), a local unit of energy giant Royal Dutch Shell and Chevron Malampaya LLC each has a 45 percent stake in the project while state-owned PNOC Exploration Corp. has 10 percent.

The SC 38 consortium previously expressed its interest to extend the license until 2039.

In late 2013, a similar shutdown resulted in a major increase in power bills as a supply shortfall forced Manila Electric Co. (Meralco) to buy electricity from the Wholesale Electricity Spot Market (WESM) where electricity supply is auctioned off.

Prices at WESM then went up as a number of power generation plants also shut down during the Malampaya maintenance.

Meralco announced a rate increase of P4.15 per kilowatt/hour (kWh) in the December 2013 bill that prompted civic groups to protest the increase.

On 23 December 2013, the Supreme Court issued a temporary restraining order that kept generation rates steady.

While the shutdown of the Malampaya facility happens once every two years, it overlapped with scheduled repairs of other power plants.

Cusi said the Malampaya proponents estimate that the downtime will last three weeks.

“There’s nothing wrong with the Malampaya maintenance,” he said. “That is needed, but I wanted to prevent surprises.”

The estimate is that Malampaya’s natural gas reserves will be depleted in 2027 which will be three years after SC 38 expires.

“It could be depleted in 2027. So, that’s the reason for the government to push oil exploration. Again, we don’t want to act when the problem is already there,” he said.

Cusi said the onset of El Niño also presents another problem when the summer season arrives similar to what happened to Mindanao in 2015.

Brownouts then were frequent in the region, because there was no water. Water used for hydroelectric plants compete with food production and in irrigation.

“Similar to the San Roque Dam in Luzon, which is used for irrigation. So, during summer, the policy is the farm. We have to sacrifice energy production. What we are saying is that we can’t depend on hydro. That’s why… what is important is the mixture of energy source,” he said.

“Ngayon naman dito sa hydro, ang sinasabi natin which I asked some power plants already, yung operating hydro to put solar on top of the water (When it comes to hydro, what we are saying is that we have already asked some power plants who are operating hydro to put solar (panels) on top of the water),” he explained.

Cusi said the country has thin energy reserves this summer, but he said through preparation, long outages can be prevented.

“In the past, prior to 2016, there were frequent intermittent brownouts. Now, we are making sure that your room lights up when you hit the switch,” he said. “Sometimes we take for granted the importance of electricity, since we are not experiencing outages now.”

“That’s what the DoE is trying to do: to build up the capacity so that we can support the present demand and give enough reserves where people can source it, use it, to create wealth. Because you use power to create wealth,” he said.

Cusi added the current capacity to generate additional power is in line with the growth in the gross domestic product.