Nationalization eyed to solve power crisis

Nationalization eyed to solve power crisis

The specter of nationalization reemerged in the House of Representatives on Friday as ACT Teachers Rep. France Castro suggested that the government reassume the management of the power sector in response to the ongoing energy crisis.

Castro, also House deputy minority leader, said the government must step in to stabilize the power industry after the National Grid Corporation of the Philippines (NGCP), the sole operator of the country’s power grids, repeatedly declared red and yellow supply alerts over the past two weeks while consumers are starting to feel the effects of soaring power rates.

READ: Nationwide red, yellow alerts raised as power supply further thins

By nationalizing the power industry, Castro said, Filipinos could enjoy stable and affordable energy access for all Filipinos.

But a return to state control of the power sector will waste the reforms in the energy sector since 2001, when the Electric Power Industry Reform Act of 2001 (Republic Act No. 9136) was enacted.

RA 9136, which has remained unchanged over 23 years, itself divided the power sector into generation and distribution subsectors, which now involve private companies that have spent billions of pesos in infrastructure development.

‘Crisis proportions’

Moreover, the costs of nationalization will again impact the national government budget deficit amid the expected increase in foreign loans and the servicing of interest and subsidies in addition to the costs of corruption.

Specifically, Castro revived proposals to nationalize the Casecnan plant in Nueva Ecija, Sucat plant in Muntinlupa, and Malaya plant in Rizal, which were once state-owned assets but have since been sold to the private sector.

She also advised the government to prioritize the rehabilitation and full utilization of state-owned power plants, like the CBK Hydro power plant, Mindanao coal plant and Agus-Pulangui Hydropower plant.

READ: Senate probe set as power rates doubled during yellow, red alerts

Currently, there are efforts to relax foreign investments in the energy sector as part of economic charter reforms being sought by the House.

However, opposition lawmakers like Castro and the rest of the Makabayan bloc have opposed such moves, arguing that further privatization of the country’s public utilities would lead to relentless rate hikes and frequent system failures.

This results in “cartels colluding on industry conditions, as seen in Luzon and Visayas where privatization has caused record-high power rates, setting a worrying precedent for Mindanao,” Castro stated.

Her calls also come as the Department of Energy (DOE) announced that the energy sector has reached “crisis proportions” because the supply shortage is expected to last beyond the expected peak of the dry season in mid-May due to the intense heat.

No announcement

Electric power distribution company Meralco earlier also warned that power demand is expected to rise along with rising temperatures, as the forecasted peak demand for Luzon rose to its highest for 2024 at 14,016 versus the projected peak demand this year of only 13,917 megawatts.

The DOE, however, has remained almost silent on the supply shortage, blaming the unusual heat for the outages of dozens of power plants, most of which are older than 20 years old.

The department has made no announcement on the use of modular power plants, whether diesel- or coal-fired, that are expected to ease the reserves shortage.

There has also been no announcement of new power plants coming online soon, even as the department focuses on renewable energy plants that will take years to complete and make operational at great cost. Even project feasibility studies can take years to complete.