Reiterates calls for renewable energy push, abolition of pasa-load, reduction of power cost, and increase in power supply

QUEZON CITY, 26 July 2022 – Reacting to President Marcos, Jr.’s pronouncements in his first State of the Nation Address citing cheap and reliable energy as a fundamental requirement for economic growth, ICSC Senior Policy Advisor Pete Maniego said:

“ICSC agrees that the Philippines should increase the level of energy production to meet its current demand. It should take advantage of the best technology available, especially in the area of renewable energy.

“The Philippines has one of the lowest electricity per capita consumption in ASEAN – not because we are energy efficient, but because of insufficient and undependable power supply.

“Renewable energy is abundant in the Philippines. Solar and wind plants have the advantage of lower levelized cost of electricity compared to fossil fuel plants. Renewable energy sources have proven to be more reliable, too. If we are to be energy independent, renewable energy is the only and logical way to go.”

ICSC has been pushing for the abolition of the automatic fuel price pass through, or “pasa-load”, in all power contracts. Pasa-load allows fossil fuel plants to pass on all foreign exchange and global fuel price risks automatically to consumers. For most consumers, over 50% of generation cost in electric bills come from coal plants.

Removing pasa-load will level the playing field among power technologies. It will encourage developers and distribution utilities to choose affordable, reliable, secure energy sources, such as solar, wind, biomass, hydro and geothermal sources over fossil fuel plants.

In response to Marcos, Jr.’s Midstream Natural Gas Industry Law proposal, Maniego added:

Fossil gas is the bridge, until we have installed adequate renewable energy power and storage capacity to meet the growing demand. The necessary infrastructures should be in place to facilitate the just energy transition. However, we should avoid replacing excess base-load coal with excess base-load gas. The optimum energy mix must be established and updated regularly in the Philippine Power Development Plan. The possibility of stranded assets over the long term must be considered, given the drastic reduction in prices and increase in efficiencies of solar, wind, and storage technologies.”

With respect to the proposed amendment of Republic Act (RA) 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA), ICSC agrees with the immediate need to address the high cost of electricity and insufficient power supply as cited in its Luzon Power Outlook Report. Further, Maniego said:

“Many goals and policies under EPIRA remain unrealized. If we are to mobilize renewable energy, mechanisms which provide undue advantage to fossil fuel plants like burdensome automatic fuel pass through should be discarded.

“The current bias for large centralized generation should be abandoned, in favor of distributed and flexible generation. EPIRA must be strengthened to achieve resiliency, flexibility and connectivity in the power sector. Reliable and affordable power as well as consumer protection should be the top priority of energy regulators.”

ICSC has been calling for tougher penalties on coal power plants that have exceeded ERC’s allowable outage limit, such as Calaca Power Plant that has been on shutdown since November 2021. The unreliability of coal power plants have resulted in higher power prices. The record high fuel prices and forex rate have exacerbated the problem.

The Institute for Climate and Sustainable Cities is a Manila-based climate and energy policy group advancing climate resilience and low carbon development.

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