A showdown or just a show? (2)

November 04, 2019

Well, this is the difference between truth and fiction. Fiction has to make sense.  

– The International
            
One of the reasons that a top Manila Electric Co. official mentioned for rejecting Energy Sec. Alfonso Cusi’s instruction sounded very ominous.

According to this official, “there are financial and economic differences between brownfield and greenfield plants”.

The explanation, however, is a lame excuse for denying Meralco customers no other choice but to pay for expensive electricity.

Available information shows that HELE plants, which often run on coal, indeed “differ” from other coal-fired power plants because they are more expensive to build and operate than the other power facilities.

To recover the higher expenses, their owners would have to charge customers higher power rates. Ah, the inevitable “pass on” comes to pass.

New power plants in general also are more expensive than their brownfield counterparts.

That’s because owners of new power plants still have to recover the full cost of building their new facilities by collecting from customers “capital recovery fees” that are imbedded into the per kilowatt-hour cost of electricity.

Owners of brownfield power plants may have recovered already the cost of building these power plants; they need not add a CRF component in their offers during the bidding. They can, therefore, sell their electricity at rates lower than their greenfield counterparts.

Clearly, these “economic differences” mean something for consumers; They make (what else?) but the difference between paying expensive and inexpensive electricity.

So why limit the bidders only to those with greenfield power plants using HELE technology?

Atimonan One is now the only genco in the country that is ready to build a greenfield HELE power plant, based on the terms and conditions of Meralco’s proposed CSP.

The answer to the question above is clear as daylight. Meralco wants the PSA reserved only for Atimonan One.

By insisting on imposing the restrictive bidding terms, Atimonan One avoids competing with outsiders that certainly can beat the Meralco subsidiary in an open and transparent bidding.

To hide its defiance, Meralco acceded to another instruction from Cusi.

It announced that it would divide the 1,200-MW supply up for bidding into smaller chunks of 150 MW -- not just into two, 600-MW blocks similar to the two-unit Atimonan One project -- so gencos with smaller plants can bid.

This concession, however, is just a cosmetic application. For as long as Meralco refuses to drop the HELE requirement, no other bidder would qualify to join the bidding for the Meralco PSA.

Meralco may argue that HELE plants are more “environment friendly.” But if the consideration is the environment, why not include renewable energy among the eligible technologies?

RE power plants do not spew to the environment harmful carbon dioxide.

If Ped Xing got it right, there are those who say that the invention of the phrase “high-efficiency, low-emission” technology is a form of coal “green-washing” because HELE plants fueled by coal still emit more carbon dioxide than RE power plants.

An open and transparent bidding is not the track that Meralco wants to follow for the 1,200-MW PSA.

Under CSP rules, a second failed bidding would give Meralco an excuse to negotiate with Atimonan One. It needs just this second failed bidding to finally consummate its sweetheart deal with Atimonan One.

But in defying and disrespecting Cusi, Meralco may have set the stage for a fight with the DoE chief.

The looming faceoff may lack the entertainment value of the raging brawl among the showbiz Barreto sisters, but the outcome of the Meralco-DoE fight would determine whether millions of Meralco customers would save -- or spend -- more money for their electric bills.

Of course, it would all depend on whether Cusi would fight or walk away in the face of a giant, powerful, and monopolistic distribution utility.

Would the guy stand his ground or stand down? Abangan.

Behold God’s glory and seek His mercy.

Pause and pray, people.