Weekly Insights and Analysis

Energy Crisis in the Philippines: An Electricity or Presidential Power Shortage?

March 18, 2015

By Steven Rood

As predicted, the Philippines is heading into a severe “summer” power crisis. One peculiarity of the widespread use of English in the Philippines is the mismatch between seasonal names and the months of the year. Leaves start falling from trees in March – is it “autumn?” No, trees are just preparing for the dead season – not the long cold nights of winter, but the long, hot dry days of summer: April and May. The Philippine term for this period is literally “the time of heat,” but among English speakers this is “summer,” rather to the bemusement of Americans who associate that term with June through August.

Philippines Energy crisis

The Philippines faces a looming energy crisis, and general concern for electricity supply (and price) has been a feature in the Philippines for years. Photo/Flickr user Adam Cohn.

Thus the label “summer brownouts” for the impending power shortage expected to descend on the Philippines in the next few weeks. “Brownouts” is another Filipinism – rather than referring to voltage reductions, it means power outages or “blackouts.”

Hydropower is reduced due to the seasonal dry spell, and a major gas production facility supplying power plants will be shut down, so that electricity reserves will be running lower – low enough that a random “tripping” or shutdown of a power plant on the grid might cause widespread outages. Or there may be more proactive management of an electricity shortage, with rotating outages among localities – a practice that is fairly common in the southern island of Mindanao.

Those with long memories will remember that the Philippines has been here before, in the (literally) dark days of the early 1990s under the administration of President Corazon Aquino (the current president’s mother). The 1986 ouster of President Marcos led to the cancellation of a controversial nuclear power plant, and no new capacity was built – leading to daylong outages that stalled the economy. The incoming Ramos administration (1992-1998) solved the problem through emergency powers granted by the 1991 Energy Crisis Act to conclude contracts for new power generation.

Those whose memories do not go back that far might know that this looming energy crisis has been predicted for a year now, and general concern for electricity supply (and price) has been a feature in the Philippines for years.

So why hasn’t the government’s response been more proactive?  One answer is red tape. The Department of Energy estimates that it takes 165 signatures and a minimum of three years to secure the necessary permits (which can then be challenged, and delayed, in court by local activists opposed to, say, coal power plants). Another is reluctance of some investors in the face of contractual and pricing insecurity. In the last decade, the previous Arroyo administration renegotiated the contracts made during the energy crisis in the 1990s to try to get more favorable terms. And the Energy Regulatory Commission has often been slow to approve cost recovery, delaying rate changes in the face of increasing generation costs.

The main response to the predicted shortages has been the Interruptible Load Program (ILP). This enrolls large establishments who have their own generators (shopping malls, office buildings, factories) to voluntarily interrupt their power from the main grid and start running their generators when a shortage is predicted. The concept is that if an outage occurred they would have to do so anyway, so it is more socially and economically beneficial to do this in a planned fashion. Though the details of compensation – its source and amount – have not been finalized, many firms have signed up. Some private sector economists feel this will be sufficient. Others are not so sanguine, including the government’s Department of Energy. Thus, last year, the administration of President Noynoy Aquino requested a joint congressional resolution granting him emergency powers for a limited time period to fast-track contracts for new power generation. The proposal was controversial – naturally the political opposition was suspicious of increased presidential powers; some felt that since the ILP was in place it was not necessary, and others recalled the Ramos example as yielding high-priced power. In the event, Congress has not (as of this writing) passed the resolutions – both the Senate and House of Representatives passed a version, but a conference committee has been unable to resolve differences.

This feeds into the discourse about a “power shortage” of another kind – the allegedly waning power of President Aquino. Last year there were controversies about pork barrel funding through legislative-executive collaboration, and a flexible executive budgetary process (the Disbursement Acceleration Program), both of which were declared unconstitutional by the Supreme Court. Many warned that without these political tools the president’s influence over the legislative process would be weakened.

Most recently there has been the constant controversy over the January 25 clash in Mamasapano, Maguindanao, where 44 members of the Philippine National Police Special Action Force were killed in an operation against the Malaysian terrorist Marwan. Eighteen members of the Moro Islamic Liberation Front were killed in the incident, along with five civilians. For six weeks now, controversies, multiple inquiries, and televised Congressional hearings have dominated the headlines.

This week public opinion data showed that nationwide approval and trust of President Aquino had taken a hit. Many take this as another sign that the president is weakened politically. What they do not take into account is that he is far more popular than was President Gloria Macapagal-Arroyo at a similar point in her presidential term (15 months before the end), and she remained a political force right up to the very last day of her incumbency.

So, we’ll have to see if the Philippines can avoid power outages this summer. But we can confidently predict a President Aquino to be reckoned with until July 2016, when he steps down.

Steven Rood is The Asia Foundation’s country representative in the Philippines. He tweets @StevenRoodPH, and can be reached at [email protected]. The views and opinions expressed here are those of the author and not those of The Asia Foundation.


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