02 February 2009
Debt & Public Finance
—For making the public choose between paying more for power generation that they do not need to begin with, and tolerating misplaced priorities where debt service supersedes social welfare, the Freedom from Debt Coalition today urged Congress to stop the planned rehabilitation, re-commission and commercial operation of the controversial Bataan Nuclear Power Plant.
“This ‘Monster of Morong’ is a symbol of the Philippines’ struggle against a debt-driven development strategy – often peppered with rent seeking and cronyism – that different administrations, including the current disposition, have espoused,” said the group’s vice president, former Rep. Etta Rosales.
“To revive the BNPP would be to create greater social deficits and push the Filipino people deeper into the vicious debt and underdevelopment trap,” said Rosales. “To make the BNPP operational would be to gamble away the people’s lives on a lost deal.” Over-projection
In a position paper
submitted to the members of House Committees on Energy and Appropriations, the advocacy group questioned the projection of an impending power shortage, stressing the government’s track record in forecasting electricity as “self serving at worst and dismally inaccurate at best.”
“First and foremost, where are the studies that support this claim of an impending power shortage?” asked Rosales.
To prove that the government’s projections are founded on “faulty rationales,” FDC cited the 1993 Power Development Plan by the Ramos administration projecting a 10 percent annual growth rate in demand for electricity over the next 10 years.
“This steep growth in demand failed to materialize, based on DoE (Department of Energy) data. Aside from that, data show that installed capacity and dependable capacity of generation plants had been greater than demand for the period of 1990-2001, except in 1993 when the country was hit with El Nino that had crippled the hydroelectric plants in Mindanao,” Rosales explained.
Another instance of wrong government forecasts is the Visayas experience, where a citizens’ initiative towards a Multi-Stakeholder Power Development Plan (MSPDP) for Panay was launched, according to FDC.
“While the DoE initially stayed away from this initiative, it has recently recognized this bottom-up planning approach and is now supporting a broadened exercise for Western Visayas. A comparison of DoE projections of demand growth for Western Visayas, and that of the MSPDP shows the latter to be closer to actual demand,” the group said.
Pangasinan Rep. Mark Cojuangco, principal author of the "Bataan Nuclear Power Plant Commissioning Act of 2008,” trumpeted that the BNPP is expected to supply at least 20 percent of the anticipated power shortage before 2012 of 3,000MW.
FDC said that over-projecting demand has led to an overcapacity situation in the Philippine electricity sector for more than a decade now, and this has been proven to be as expensive – if not more – than a power shortage.
“As of April 2008, DoE data show that total installed generating capacity on a national level is 15,937.1 MW. Of this, 83 percent or 13,205 MW is said to be dependable capacity. Peak demand is only 8,999 MW, which gives an excess generating capacity of 4,212 MW. This 4,212 MW is the dead weight loss to the Filipino consumers, mostly households, who must pay for the excess capacity even if the plants are idle, thanks to the ‘take or pay’ clause in the contracts the Ramos government signed with the independent power producers (IPPs),” the group said.Base load
Citing a study by Prof. Rowaldo Del Mundo of the National Engineering Center in the University of the Philippines, FDC said that in Luzon alone, 85 percent of base load, or the minimum demand for power given any time of day, within the Meralco franchise area comes only from 3 major power plants, even as there are a total number of 55 power generation facilities in Luzon.
“Reviving the BNPP at this time when the base load can only be seen to be shrinking, given the current global economic crisis, is grossly imprudent,” the group said.Industrial plan
“Even if the government would defend this projected increase in demand, we ask: Where is the industrialization plan that must necessarily be the basis of this anticipated growth in demand? And, should there be additional demand as projected by the government, what convinces us that this additional demand cannot be met by the combined dependable capacities of all generation plants, much less if all these plants were actually pushed closer to its installed capacity?” FDC asked.
FDC emphasized that the biggest driver for electricity demand increases is an industrializing base of the economy.
“The Philippine domestic economy is not on industrialization mode but is actually service sector driven. Moreover, in times of economic crises when companies are closing plants, shortening operating hours, or laying off workers, a corollary contraction in electricity demand is expected. And as the crisis is expected to last until 2011, at the most generous projections, the alleged need for increased generating capacity is thus eliminated,” the group said.
The only possible justification specific to the operations of a nuclear power plant is to meet an increase in base load, or replace existing base load supply. An increase in base load is highly unlikely in times of economic crisis, the group said.
“However, it is a much worse option to replace existing base load supply as the current generators to meet such demands are the environmentally safe geothermal and hydroelectric power plants that are very much necessary in times of a climate crisis,” FDC said.More wasteful, useless debt
FDC also questioned the proposal to raise equity up to $1 billion, through a surcharge of 10 centavos/kWh of the total electric power generated or international or domestic loan agreements, under Section 22 of the substitute House Bill.
“Is the government making the public choose, or is this a question of being caught between the devil and the deep blue sea? They make us pay more for the increased electricity surcharge, while debt service is prioritized over social services,” Rosales said.
FDC claimed that nowhere in this world has the re-construction of nuclear power facilities been right on schedule and on budget.
“After being mothballed for over 20 years, the BNPP will more likely need more than the projected $1 billion to meet the technical and safety demands of a fully operational and nuclear meltdown – safe structure – and this, without factoring in the monumental costs of corruption and bribery that the BNPP itself represents, and the current administration has mastered,” FDC said.
Moreover, nuclear power plant operations will necessitate government financial support, particularly when we factor in buying and safely transporting the highly expensive and toxic uranium ore needed for the functioning of a nuclear power plant, the group said.
“As is the experience in Japan, without government subsidies, no self-respecting, profit-oriented enterprise will undertake the project mainly because of the exorbitant price for operations. Can the Philippines afford to subsidize a project with this level of danger and expense? To subsidize the generation costs and mandate the payment of a 10 centavos/kWh surcharge, or to bring the public deeper into debt and charge them exorbitant rates for the energy they will consume, the government will be pushing the people into a deeper level of economic and financial crisis,” FDC said. -30-