The Philippines has an unreliable power supply and the highest electricity rates in Southeast Asia. [1] Supply is insufficient to meet demand, especially in Luzon and Mindanao where blackouts are common. [2] Power generation and distribution are controlled by a small number of large companies. [3] Every increase in electricity rates significantly impacts consumers and businesses. [4] Expensive power undermines competitiveness and economic development. Focus should be on building reliable base load capacity and reserves before pursuing renewable energy or other programs that increase costs without ensuring supply.

1. THE POWER SITUATION
AN ADVOCACY FOR GOOD SENSE OF PRIORITY
A. Current Power Situation
1. Supply Outlook
a. Luzon – 1200MW needed to assure sustainability and reliability
• only 600MW (GN Power) expected in 2013
• 300MW is needed every year
• There is not enough reserve
b. Visayas – ok but would need 200MW by 2013 and on every year.
c. Mindanao – already in trouble
• rotational black outs ranging from 2 to 4 hours is ongoing and expected to get
worse when the dry season comes
• only the 300MW of STEAG is in process of getting started and would be
expected to be online in 2013-14 earliest
• 300MW of Aboitiz is also in the making and may be on line by 2014-15/
2. Power generation is now in the control of 4 large groups, namely, Lopez, Pangilinan,
SMC, Aboitiz with smaller ones like AES (600MW), Salcon (250Mw+) in Cebu and Bohol
and Globe (Metro Bank) in Cebu and Capiz
3. Distribution is controlled by Meralco (71%) in Luzon, Aboitiz (700MW+) in Visayas plus a
300+MW in Davao and Cotabato and southern Davao, Cepalco (100+MW) in Cagayan de
Oro, Ceneco a coop (100+MW) in Bacolod, and 30MW in Bohol (Salcon). All the rest are
mostly coops ranging from 5MW to 20+MW
B. Our Power Rate is the HIGHEST in the region based on the 2007-08 survey – PH is USD
0.18 /kWh, Singapore USD 0.15/kWh, Thailand USD0.08/kWh, Indonesia, Vietnam and
Malaysia were much lower. Today, PH is USD 0.21/kWh.
C. Based on current demand level of 7,300MW, every one (1) centavo per kWh is equal to
P657,000,000.00 per annum.
Every one (1) centavo of power increase means P263,000,000.00 or 40% is taken away from
the table of the poor (lifeline customers), P118,000,000.00 or 10% is taken away from the
clothing, medicine and transpo budget of the housewife and the final P341,000,000.00 or
52% is added to the cost of production and commerce.
D. That is why PH is rated very low in competitiveness and why the PPP and its desired
drawing effects (jobs and investments) would have low probability of success.

2. E. WE NEED TO FOCUS ON
1. BUILDING OUR REQUIRED POWER BASE LOAD AND RESERVES,
2. STOP THE ESCALATING POWER COST OR TARIFF AND FORMULATE A PROGRAM ON
HOW TO BRING IT TO COMPETITIVE LEVEL (VS OUR NEIGHBORS –DIRECT COMPETITORS)
3. START BY STOPPING OR SUSPENDING ANYTHING UNNECESSARY AND EXTRANEOUS
PROGRAM THAT WOULD ADD COST TO OUR POWER
F. Power Cost Increases Anticipated
1. PSALM‘s P1 Trillion stranded debt and cost to be charged to “Universal Charges” -
estimated at P0.39/kWh initially only.
2. SPUG budget short fall of P7B just for 2011 ---estimated at P0.07/kWh again to be
included in the “Universal Charges”
3. The pending petitions of Meralco and other Utilities for recovery under the GRAM and
CERA
4. The increase in “Generation Charges” from the PSA renewals by the privatized Gencos
whose TSCs (Transition Supply Contracts) are up for renewal in 2012.
5. The increase in “Generation Charge” from the renewal of the TSCs (Transition Supply
Contracts) of the IPPs (thru the IPPAs) which are up for renewal in 2012.
G. AND NOW, this RE Program that would add P0.1256/kWh PLUS the required 100% reserve
creating additional Pxx/kWh and the required National Grid Corp. of the Phil. (NGCP)
systems investments to accommodate these RE plants creating another additional
Pxxx/kWh
H. We are not against RE BUT…
1. We have already 34% RE and it is highest in the world PLUS the RE plants do not assure
us of security and sustainability because while the fuels are free, they are not
controllable in volume, supply, intensity and availability
2. Applicable technologies are not yet commercially matured; we would be diverting our
priority wrongfully both in value and volume.
3. The front and effective costs of the RE plants (Wind and Solar) are AWESOME because
their average usefulness or annual average availability is only 24% to 30% (at very best
still unattained) so that only 24MW to 30MW is actually the annual average availability
of a 100%MW solar or wind power plant. And they would require a 100% reserve
provision.
WE MUST REMAIN FOCUSED ON OUR PRIORITIES, I.E. BUILD THE BASE LOADS AND RESERVES
AND STOP ANY UNNECESSARY POTENTIAL POWER COST INCREASE.