25 July 2003
Ms. Marites Danguilan-Vitug
Editor in Chief
Nobody likes brownouts or the spectre of a power crisis looming over the horizon. So the argument of an impending power crisis becomes a handy tool to compel acquiescence from a public long hammered by high electricity rates.
When the government was pushing for the passage in Congress of the EPIRA (Electric Power Industry Reform Act), its carrot was a pledge to bring down electricity rates, while its stick was – you guessed it – blackouts. Now with EPIRA as law, people in the Visayas, particularly Cebu, are being made to “choose” between higher power rates and anomalous contracts on the one hand, and on the other – guess again – blackouts. Another “choice” being forced on us is highly polluting power generation versus – no more guessing – blackouts.
Although Mr. Carandang’s article in Newsbreak (“When Darkness Falls…”) contains factual errors too numerous to enumerate in this letter, we have to thank him for helping us see the light. As told by Mr. Carandang, the real point of EPIRA – of privatizing the National Power Corporation (NPC), of deregulating power generation and supply, etc., etc. – is to enable electricity rates to continue to rise, presidential pledges notwithstanding. The carrot is mere illusion. The stick is being whipped around to no end, by energy officials, regulators and unwittingly by journalists too who fail to question what one can normally consider as worn out premises of this government.
We enjoy reading Newsbreak and have a deep respect for its editorial integrity yet we have to take issue with the rejoinder you made when one of your readers, Professor Dean de la Paz, pointed out the factual errors in Mr. Carandang’s article. We are baffled by the curious, almost dysfunctional, mention of Covanta, another independent power producer (IPP). Of all the IPPs you could possibly cite to stress that Cebu Private Power Corporation’s troubles are shared by other IPPs, Covanta should have been last, if at all.
Pointing out the issue of Covanta alone can show the shaky logic prevalent in Carandang’s piece. Consider the following:
1) Cebu Private Power Corporation is a peaking plant, while Covanta’s plant in the Cavite export zone is a base load plant.
2) Covanta’s Cavite plant cannot operate in island mode on base load basis, per documents submitted by PEZA to the House Committee on Energy. It simply cannot generate stable and reliable electricity that the exporters in the zone, who operate on three shifts 24 hours a day seven days a week, require!
3) Covanta’s “ingenuity”, as you so admiringly point out, in buying electricity from NPC and selling it to PEZA, reduces this IPP to a middleman, a mere broker, instead of a producer. It is forced to do this because its machines can’t operate as required by its contract with PEZA.
4) In its contract with NPC, Covanta was supposed to generate electricity for NPC only to the extent of its idle capacity, that is, capacity that was not being used to supply PEZA with electricity. But guess what, the contract with NPC has a minimum offtake provision. Furthermore, Covanta passed on to NPC its contractual obligation to supply stable and reliable electricity to the Cavite export zone. Covanta is the generator of electricity in its contract with NPC, but all of a sudden, NPC is obligated to supply PEZA with electricity, so that Covanta can meet its obligation to PEZA in a separate contract to which NPC is NOT a party. You may call Covanta ingenious. We call it “WAIS.”
5) The Lower House continues to question Covanta’s middleman, non-producing role. Why should a US company which has already filed for bankruptcy in the United States, serve as a go between for NPC and PEZA – both of which are government entities – and profit as a result. Again, you may call this ingenious. We call it “WAIS.”
We know you are committed to the tradition of factual and critical reporting, and we ask only that your writers uphold the same. Your magazine deserves no less.
Members of the Citizen’s IPP Review Commission
Ana Maria R. Nemenzo
Maria Teresa D. Pascual