When Private Sector Efforts Aren’t Enough

Recently, tech giant, Amazon announced three renewable energy projects totaling 265 megawatts (MW) that would provide power to its data centers. The tech giant said these new projects are all part of Amazon’s efforts to power 100% of its operations via renewable energy.

The three projects consist of a wind farm with a maximum capacity of 50 MW in Scotland, and two solar projects with 215 MW capacity in North Carolina and Virginia. All three projects are expected to start generating power by 2021.

Amazon’s new renewable energy is all part of the company’s commitment to helping the environment. “We are committed to minimizing our carbon emissions and reaching 80% renewable energy use across the company by 2024,” Amazon’s Director of Sustainability Kara Hurst said.

Amazon is not the lone global brand to make headlines recently for its commitment to renewable energy. Likewise, The Estée Lauder Group announced that it has already reached 100% in renewable power in the United States and Canada ahead of its target date. The brand also announced that it has signed a virtual power purchase agreement (VPPA) for wind energy. This makes the Estée Lauder Companies Inc the first prestige beauty firm to execute a VPPA.

Under the signed VPPA, the beauty company will purchase power 22 MW from the Ponderosa wind farm in Beaver County, Oklahoma owned by NextEra Energy Resource. The company says this new development is a great addition to its renewable portfolio “We’re so pleased to meet our 2020 RE100 commitment for North America early. Projects like the Ponderosa wind farm and others in our Net Zero portfolio are all significant achievements toward our commitments to address climate change,” said Nancy Mahon, Senior Vice President, Global Corporate Citizenship and Sustainability of The Estée Lauder Companies Inc.

Corporate renewable energy procurement has been aggressive in the last few years as private firms do their best to honor their commitments to zero emissions.

In 2018, corporate renewable energy deals were on a roll as clean energy contracts entered into by corporations more than doubled from 2017. There was a total of 13.4 gigawatts signed by 121 corporations across 21 nations last year.

Corporate renewable energy deals are impressive but are they enough to meet the world’s commitment of net-zero carbon by 2050?

The answer is no, since gas, oil and coal still dominate the energy mix according to Nick Butler, chairman of The Policy Institute at King’s College London and energy commentator for Financial Times. He stressed that in 2018, only $300 billion out to $1.8 trillion in investments in the energy sector went to renewables. The rest of the money went into fossil fuels, particularly gas and oil.

Butler says the established hydrocarbons for energy remain resilient since renewables only supply five percent of the global power demand. Within 10 years, renewable power is only likely to contribute 12 percent to global energy. Coal will continue to dominate in the next few decades.

This is not to say that renewables will never be the primary source of energy. Butler points out that renewables could dominate the world’s power mix but it will take more than 20 years.

The chairman says that the key to a faster energy transition is more involvement from the public sector. So far, return on investments for renewable energy is still far from the returns in oil and gas projects.

Butler proposes the adoption of a mixed economy model where the state will provide long-term capital to balance the low rate of with the value that renewable power brings to the public. He cites the cases of BP, and Equinor, formerly known as Statoil. The latter was put up by the Norwegian government as the state’s oil company and later became a major player in the gas market and the world’s largest oil and gas offshore operator. The company has rebranded into Equinor and now actively investing in solar energy and offshore wind.

For the Philippines, this will require a major shift in its energy policy.  The EPIRA clearly steered the Philippine power sector to more private investments rather than the government. Its intention was to make the power sector “market driven.”  Unfortunately the Philippine energy market is not efficient and still too young to be a reliable indicator of market prices.  Therefore relying on this current market structure will not bring in new renewable energy projects in the scale and speed at which we need to put in place in the country.

There are ways to make the shift possible even under the current EPIRA regime.  The Renewable Portfolio Standards (RPS) regulation is one way to go albeit its contribution will be very small. The issuance of a tariff policy requiring more stable power rates will help bring this surge in renewable energy investments.  There are other ways.  However, the government must first realize the need for more RE investments.  Otherwise, all its policies and directives will be palliative solutions to what is going to be a major challenge in the country’s energy security situation.

https://www.theclimategroup.org/news/est-e-lauder-companies-inc-achieves-100-renewable-electricity-us-and-canada-ahead-schedule-and

https://cleantechnica.com/2019/11/13/corporate-green-energy-adoption-flourishes/

https://www.cnbc.com/2019/10/24/amazon-announces-three-new-renewable-energy-projects.html

 

Getting Ready for IoT

The Speedtest Global Index ranked the Philippines 103rd out of 139 surveyed countries in terms of mobile internet speed. Our average internet mobile download speed is 15.06 megabits per seconds (Mbps), which is significantly lower than the global average of 26.12 Mbps Our average is even slower than war-torn Syria which has 19.48 Mbps and Zimbabwe’s 15.2 Mbps

For fixed-line internet, our country was again one of the slowest placing 101 out of 179 countries in the study. While the global average is 57.91, ours was much slower at 19.51. That’s not even half of the speed of the global average.

Just last September, 1-Pacman Rep. Mikee Romero filed a bill in Congress seeking to establish and create a comprehensive broadband control and management framework.

HB 185 or the National Broadband Development Act aims to create more efficient Information and Communication Technology (ICT) and broadband services in the country. The bill seeks to create an integrated policy environment that would lead to a broad market-led development of the ICT enabled services. The bill aims to expand and establish ICT infrastructure to enable the continuity of ICT-broadband based services that can help support the government’s economic objectives.

In the bill’s explanatory note, Rep. Romero says he hopes ” to ensure universal access to quality services, promote the development and widespread use of emerging new ICT technologies, and to ensure the availability and accessibility of services in all areas.”

Of course, it’s embarrassing that the Philippines has one of the slowest internet speeds in the world. We need a stable and reliable internet connection not only because we need to stream in high definition or so that we can enjoy internet-based games.

No, we need a faster and reliable internet connection for economic development. We need this reliable internet so our consumers can have better energy choices and control their consumption. The power sector, after all, is in the cusp if not already in a massive transformation phase with the emergence of renewable energy and storage technologies. Plus, of course, there’s the Internet of Things or IoT.

IoT, in its simplest explanation, is about the connectivity of one device with an on and off switch to the internet or a massive network of connected things. This means that “anything that can be connected, will be connected.”

And as the internet is widely becoming more available, there are more devices produced with Wifi capabilities and built-in sensors. Smartphone penetration is also high as more phone makers are making them affordable. In the energy sector, IoT is revolutionizing every aspect of the power industry including generation, transmission, and distribution.

Just how is IoT changing the energy industry?

For starters, sensors allow for the remote maintenance of the generation, transmission and distribution equipment. There’s the digital twin technology that creates an advanced digital model of an existing piece of equipment. When connected to the physical equipment the digital twin technology can collect data about the equipment’s performance remotely. This also means that such technology will allow virtual troubleshooting and support even in remote areas. Imagine, being able to monitor the performance of our energy equipment in remote and hard to reach areas by simply clicking on mobile phones.

IoT also allows for a more distributed grid. With the growth of home solar panels, both homeowners and businesses are now generating their own power. And generating your own power is not limited to solar technology as there are also some building their small wind turbines.

The smart grid powered by IoT is indeed enabling the distributed energy transformation. And with distributed energy, grid operators can handle the demand changes on their grids. Smart grids let grid operators detect and react to the supply and demand of power remotely. This is all thanks to the fact that they can obtain information in real-time without having to rely on their on-site equipment.

Speaking of grid management, IoT also helps in better grid management as sensors placed in distribution lines and substation generates real-time power consumption data, which helps grid managers make decisions about a variety of things like network configuration, voltage control, and load switching.

IoT

IoT gives empowers consumers. Photo c/o http://www.electricalindia.com

Indeed, there are many benefits that IoT brings in the world of power. But one of the best things about this technology is that it gives more options. Hence, more power at the hands of the consumers.

Running low on budget and need to cut down on household expenses? IoT can help you. This is because of smart devices and smart meters that help customers make informed choices on their power usage.  Imagine having smart devices that can measure the power consumption of each device and appliances that can be installed in homes. Consumers can then use such information to figure out which are power-hungry appliances and optimize their use to save on power costs. 

Clearly, internet connection is changing the way we do things including in the energy sector. As such, our government should find ways to make reliable internet affordable and accessible. Sustainable and affordable power in the Philippines is achievable if we do invest in our ICTs as well.

And its not just about improving internet connectivity in the country. As we move towards a more distributed and more connected electricity system, our Department of ICT and local energy players should start investing time, effort and resources in Critical Information (CIP) standards. CIP is what helps keeps safe smart grids from attacks. It sets out the minimum security requirements for power assets that are critical to a country’s bulk electric system. Naturally, the growth of internet-connected sensors and control systems come with some vulnerabilities.

In the United States, the National Institute of Standards and Technology is on the lookout for vendors that will help in developing solutions to secure the IoT. Our regulations and plans in the future must also figure in cyber protection.

The Department of ICT (DICT) should also go beyond just common towers. It should tap the country’s power transmission and distribution towers and poles for a common fiber optic policy. Today, each telco enters into a Pole Sharing Agreement with power utilities. So we can see not only one fiber optic in our poles, but three or even more. Not only does this make our telco or cable tv services expensive, it also messes up the wires and poles of the utility.

Our government should be rolling out their sleeves and getting ready for work as the world moves towards greater use of ICTs and broadband services. Let’s go beyond simply looking at internet speeds and accessibility and figure out how cutting edge technologies are transforming various sectors including the power sector. We are now moving away from the traditional models of power distribution, generation, and transmission and we need stable internet, increased information security and appropriate regulations so that we can enjoy the benefits of IoT.

References:

https://www.philstar.com/business/2019/09/08/1949856/bill-seeks-faster-internet-connection-philippines

https://www.renewableenergymagazine.com/emily-folk/how-iot-is-transforming-the-energy-industry-20190418

https://www.utilitydive.com/news/security-and-distributed-resources-an-attacker-will-eventually-get-in-s/565966/

Missed Targets Equal Expensive Power

The Department of Energy (DOE) says it’s now updating the country’s renewable energy targets.

The DOE admits that the country has failed in meeting its targets 10 years after the Renewable Energy Act was enacted. That’s not surprising given the constant increase of approved coal power plants in the last few years.

That’s not surprising given the constant increase of approved coal power plants in the last few years.

That’s the sorry state of the renewable energy development in the Philippines. Our slowness in adopting cleaner forms of power means that we are missing the benefits of renewables such as jobs generation, a cleaner environment, and cost savings.

Our reliance on traditional sources of energy is costing Filipinos a lot of money. And it is the reason why we have one of the highest electricity prices in the world.

The above points are not only my assertion. In fact, studies after studies have shown that we are paying a high price for our dependence on coal.

One of the recent studies with the same conclusion is the report entitled “Prospects Improve for Energy Transition in the Philippines” by the Institute for Energy Economics and Financial Analysis (IEEFA). The finding of the report struck me as it echoes what I have been saying all this time.

According to IEEFA, fuel price pass-throughs have inflated power prices in the Philippines.

It is no secret that our country has the highest power prices among Southeast Asian countries. Our energy prices are also considered relatively high compared to global standards by roughly Php10 per kilowatt-hour. (KwH) The report points out that, this is due to our reliance on imported fossil fuel, high financing cost, and uncompetitive market structures.

The report cites one coal plant of 167.4 MW as an example, which was supposed to deliver Php3.96 per kilowatt based on a signed power sales agreement (PSA) price in 2016. Unfortunately, the coal plant, on an average delivered PHp2 per kWh more than the agreed price in the PSA and even reaching Php7.11 per kWh. As I have been pointing out, the difference of the price was passed on to consumers, all thanks to the “pass-through” provisions in the contracts. Sadly, it is the Filipinos who suffer from such instances as they are the ones who have to pay the cost of fluctuations in foreign exchange rates and coal or fuel prices.

By just how much did the Filipinos “suffer”? The report says that from May 2018 to May 2019, coal’s unpredictable prices has led to Filipino consumers paying more than Php788.7 million. Again this is all courtesy of the pass-through costs and our dependence on traditional power sources. That’s just for 2018 to 2019.

coal

Coal imports. IEEFA report says that from May 2018 to May 2019, coal’s unpredictable prices has led to Filipino consumers paying more than Php788.7 million. Photo c/o http://www.financialexpress.com

Unfortunately, the value of imports has climbed up significantly over the years. The report says that coal imports in 2005 was USD317 million and has tripled to over 1 billion by 2010. From 2017 of 1.9 billion it ballooned to 2.7 billion by 2018.

So, us Filipinos, have been paying billions for these pass on costs since our energy planners have favored what I have been referring to as “floating” PSAs, which as the IEEFA pointed out burden consumers with the pass-through costs.

We could have saved billions for Filipino consumers only if our planners have opted for what I call “fixed contracts”. And as my preferred term indicates such contracts peg the price at a fixed price for a specified number of years.

Unfortunately, our planners tagged fixed-price contracts as more expensive. At a glance, a PSA of Php5.10 per kWh for 25 years may look more expensive than a floating PSA of Php5 per kWh. And as the example of IEEFA, floating PSAs can reach beyond the agreed price due to global price spikes and foreign exchange. So, again, I ask which is more expensive? A floating PSA that has a lower agreed price at the start but could balloon up in the few years or a fixed price contract that will have consumers pay the exact amount until the PSA contract has ended?

Plus, of course, these floating PSAs do not provide incentives to power producers to minimize operating costs since these are passed on to consumers anyway.

There’s no denying that our energy planners’ preference for coal power despite experts’ assertions that renewable power is the way to move forward has been costing Filipino consumers a lot.

There was a time when building coal-fired power plants was an economical and practical choice. I have built some of them myself many years back. But times are changing, and what once used to work for us no is longer is the best option

Our best bet is to put our money and resources on renewable power. The IEEFA report stresses that we can lower the wholesale power prices by 30 percent if we allow renewables to flourish. I have been saying time and time again that if we want stable power prices, then we must develop and have more renewable energy in our power mix. The DOE can review our renewable energy targets all they want, but the bottom line is, our government should  pave the way for renewables to penetrate the market easily and consistently.

References:

https://www.philstar.com/business/2019/09/02/1948208/doe-updates-renewable-energy-targets

Prospects Improve for Energy Transition in the Philippines. IEEFA

The Biggest Loser

Around half of the world’s energy needs will come from renewable energy by 2050. That’s according to the latest Bloomberg New Energy Finance (BNEF) report.

The study stressed that renewable’s domination in the next three decades will occur along with the expected 62 percent demand increase for power and an additional $13.3 trillion worth of renewable energy projects.

All these scenarios are feasible as the cost of renewables has been plummeting in the last few years, the report stresses.  Since 2010, solar and wind costs have dropped by 85  and 49 percent, respectively. Battery storage costs have also declined by 85 percent.

The BNEF says solar and wind power will supply half of the world’s electricity while other renewable energy sources such as geothermal, fuel cells and devices will contribute around 21 percent.

Coal, on the other hand, will be the biggest loser in the power sector as its share in the global generation will decline to 12 percent by 2050 from around 37 percent today.

Europe is leading the shift to cleaner and sustainable energy. The region is expected to source around 92 percent of its power needs from renewable energy. China and India are also expected to source roughly two-thirds of its power from wind and solar by 2050 while the United States will get around 43 percent of its power needs from renewables.

In contrast, the Philippines is expected to increase the share of coal-fired generators in the next 30 years according to the Asia Pacific Energy Research Center (Aperc).

In its latest Energy Demand and Supply outlook report, Aperc stressed that coal is likely to contribute 39 percent of the country’s power needs by 2050 or three percent more than its current 36 percent share. On the other hand, renewable energy is seen to account for 20 percent of the Philippines power supply in 2050, which is lesser than its present 24 percent contribution.

Aperc’s projections are based on business as usual (BAU) scenario where existing policies and current trends stay the same. “Large increases in fossil fuel generation, particularly coal which triples, overshadow a more than doubling of renewable generation in the BAU,” the report says.

Aperc notes that allowing coal power to dominate our energy mix will make the country more vulnerable as the Philippines’ net energy imports will have to double. Promoting renewables and diversifying trade will be important for maintaining energy security,” Aperc said.

Our country’s dependence on fossil fuel imports also come at a high cost according to the international research group, Climate Analytics. Its report shared during recent climate talks in Germany showed that the Philippines fuel imports in 2017 are equivalent to 3.5 percent of its gross domestic product or around $11 billion.

The report also stresses that the country will benefit from shifting to renewable energy since doing so will decrease the external cost from air pollution. Climate Analytics pegged the annual average air pollution cost savings around $1.1 billion by 2025.

Adding more renewable energy in the country’s power mix is feasible, the international research group says. The report cites several studies revealing that covering merely 1.5 percent of the Philippines land area with solar installation can generate around 792 terawatt hours of power, a figure that’s 10 times the country’s total power generated in 2016.

Clearly, a shift to renewable energy is possible for nations including the Philippines. And around the world, coal is expected to be the biggest loser by 2050. Meanwhile, our country may also end up as one of the sorriest fools should we allow coal to continue to dominate our power mix.

Juan de la Cruz becomes the biggest loser.

References:

https://www.bloomberg.com/news/articles/2019-06-18/the-world-will-get-half-its-power-from-wind-and-solar-by-2050

https://news.mb.com.ph/2019/06/22/climate-analytics-report-cites-potentials-of-renewable-in-the-philippines

/https://business.inquirer.net/272280/as-ph-economy-grows-coal-remains-king-says-think-tank#ixzz5s1l138er

They’re Diversifying And We’re Not

Recently, Petronas, the Malaysian oil and gas company has announced that it will be dabbling in the renewable energy sector. The firm recently announced that it inked a deal with Singapore-based renewable energy firm specializing in solar panels, Amplus Energy Solutions.

Petronas said that its deal with Amplus is part of the firm’s strategy to develop solar power plants and rooftop project. This deal says Petronas CEO Tan Sri Wan Zulkiflee Wan Ariffin is the first step into the firm’s diversification.  “This acquisition reflects Petronas’ strategic intent to grow in the renewable energy space as part of our strategy to step out beyond oil and gas into the new energy business. This also represents our first international solar venture and we look forward to providing energy solutions to our customers in these high-growth energy markets.”

Petronas is not alone in turning to renewable power to serve their customers well and maximize their profits. In fact, many Southeast Asian energy companies that are highly dependent on fossil fuels are also entering the renewable energy market in order to meet the region’s demand for electricity.

For example, Thailand-based energy firm, Banpu sources 90 percent of its revenue from its coal plant, but recently entered the renewable energy market. “We will integrate coal with renewable energy with the aim of maximizing profit and meeting social needs,” Banpu’s CEO Somruedee Chaimongkol says.

Banpu, which operates in several Asian countries as well as the United States has installed some 150,000 Kilowatt hour worth of solar generators. The firm also plans to build 80,000-kilowatts wind farm in Vietnam by 2021.

Likewise, State-backed energy companies in Southeast Asia are adopting the same diversification strategy. For example, Tenaga Nasional, a Malaysia energy firm started the commercial operations of its 50,000 kWh solar power plant near Kuala Lumpur, which is one of the largest solar plants in the country. 

Similarly, Indonesia’s state-run utility PLN is tapping on the country’s geothermal potential by purchasing renewable energy generated by independent geothermal power producers.

Darajat_geothermal_plant_Chevron_Indonesia-1024x682

PLN’s Darajat Unit Geothermal Power Plant. PLN is buying renewable energy from independent power producers. Photo c/o http://www.thinkgeoenergy.com

These companies, which once only had coal in their portfolio are probably now seeing the value of energy diversification. 

In energy systems planning, there are three basic properties of diversifications, namely, balance, variety, and disparity as pointed out by Andy Stirling,  a professor of Science and Technology Policy at the University of Sussex.

Variety pertains to the number of energy supply options available. This is what these companies are aiming for as having varied energy types means more diversity in their portfolio.

On the other hand, balance refers to the reliance on each available energy source option available. This means an energy system is also considered more diverse if there are proportionate dependence on each energy source. Disparity pertains to the differences in each power option.

It’s not only companies that will benefit from having a diversified energy mix. As I keep repeating, nations too will be in an advantageous position if there is diversity in their energy system.

For example, the Philippines relies heavily on coal to meet energy demands. This means our power costs go up when prices of coal in the global market increase. It also does not help when the peso falls against the dollar as we import coal. Whether power consumers will pay higher electricity bills highly depends on world prices and the strength of the peso. And this is all because we source most of our energy needs from coal plants.

We also have to remember that fossil fuels are finite resources. What happens then when these resources are depleted?

This is why we need to diversify our the power mix. This means we should be able to source a majority of our power from sources that are not vulnerable to external factors such as exchange rate and global prices. And again, as I have been saying, renewable energy prices can be fixed for many years. Of course, we also have to prepare for the scenario when finite power sources are low in supply or worse, already gone.

On a side note, many see the Supreme Court decision as challenging the supply of power in the future. I think we should take a step back and think of this as an opportunity to re-think about the energy mix of the country.  We have an opportunity to inject more indigenous and renewable energy in the system. We should grab this chance.

Energy diversification indeed has many virtues. Energy companies with mostly coal power plants in their portfolios are now seeing the value of diversifying their energy sources. Sadly, the same cannot be said about our energy system, our planners and regulators in the country.

References:

https://asia.nikkei.com/Spotlight/Environment/Southeast-Asia-s-energy-majors-pivot-sharply-to-green-power2

https://www.power-technology.com/news/petronas-renewable-energy/

Diversity and Sustainable Energy Transitions: Multicriteria Diversity Analysis of Electricity Portfolios By Andy Stirling

Isn’t It Ironic?

ocean

Record-breaking year for ocean temperatures in 2018. Photo c/o Business Insider

Germany recently made an announcement that it will end its dependence on coal power plants by 2038 in an effort to meet its commitment to the Paris climate change goals. Reports noted that the country intends to reduce its coal energy capacity from 42.6 gigawatts (GW) to around 30 GW in 2020 and to 17 GW by 2030.

Germany at present still sources 40 percent of its power needs from coal. Last year was a first for the country as renewable energy dominated the power mix.

Hans Joachim Schellnhuber a member German coal exit commission hailed the decision as a move that’s very much needed in this day and age “ This is an important step on the road to the post-fossil age – a step that also opens up new perspectives for the affected regions through innovation-driven structural change.”

And I agree that the move is a step in the right direction. Each country needs to make drastic actions to help keep the world’s temperature at the desired levels. After all, the United Nations recently warned us that we only have 12 years to keep the world’s temperature to a maximum of 1.5 °C. Otherwise, we will suffer from worsening of risks of floods, extreme heat, droughts, and poverty.

We are already, of course, seeing the effects of climate change.

For example, as early as November last year, experts have warned that 2018 was likely to be the fourth hottest year on record. There is no confirmation of this record as of now. But what has been confirmed is that 2018 is that ocean’s had their warmest year on record.

The study that was published in the journal Advances in Atmospheric Sciences noted that the hot record indicates the enormous amount of heat is being absorbed by the sea due to rising of greenhouse gas emission. Rising ocean temperatures are not to be ignored says, experts, since they contribute to intense hurricanes and destruction of coral reefs.

Plus, the world is likely to suffer from El Nino this year, which will make 2019 as most likely to be the hottest year on record according to the Climate Prediction Center.

These warnings, of course, are pushing many countries, like Germany to step up their fight against dirty sources of power and honor their commitment to the Paris agreement in 2015.

The Philippines, unlike Germany and other countries, are far from making waves when it comes to greater use of renewable. This is a pity since we Filipinos have more reasons to shift to renewable power.

For starters, we are a country that is endowed with plenty of natural resources. We are just the third biggest geothermal power producer in the world. The Philippines used to be second, but sadly was overtaken by Indonesia (which merits a separate article). We are also a tropical country as well. Yet here, we are a nation that has coal plants as the major source of energy.

It also makes sense for us to do our share to help the earth limit its global warming. The Philippines, after all, has been tagged as one of the most vulnerable nations to climate change. But we are a country that has pushed back its target of sourcing 35 percent of overall energy needs by 2030 to 2040.

Plus, there’s a clamor renewable power among Filipinos. A survey by Pulse Asia last year showed that 89 percent of Filipinos are in favor of renewable energy. But alas, the country will be adding some. 10,423 MW of coal power.

We have every reason to shift to renewable energy. We have the natural resources. We are a country that suffers greatly from the effects of climate change. Our citizens want cleaner forms of energy. But no, we remain a nation dependent on coal. How ironic. And sad.

References:

https://www.philstar.com/business/2018/12/26/1879827/iemop-proposes-nationwide-system-renewable-energy-development

https://www.accuweather.com/en/weather-news/2019-may-be-the-warmest-year-on-record-as-a-result-of-an-el-nino-event-exacerbated-by-global-warming/70006943

https://edition.cnn.com/2019/01/16/world/climate-2018-hottest-year-for-ocean/index.html

More Competition in the New Year and the Coming Years

The previous year ended with news that the Meralco-Marubeni Consortium won the bidding for power distribution of the New Clark City, the first city in the Philippines to have a smart-power grid and underground cables. This means that residents and business of the smart city will enjoy low utility rates.

The Bases Conversion and Development Authority (BCDA), owner of the New Clark City is set to ink the agreement this month with the Meralco-Marubeni Consortium, consisting of Meralco, Marubeni Corp., Kansai Electric Power Co. Inc., and Chubu Electric Power Co. Inc., Their proposed tariff bid was P0.6188 per kilowatt-hour (kWh).

The Meralco and Marubeni consortium was able to beat the Aboitiz-Kepco Consortium of the Olongapo Energy Corp. and Kepco Philippines Holdings Inc, which proposed a P0.9888 per kWh tariff.

It is worthy to note that both bids were lower than the tariff ceiling Php 1.25 kWh set by the BCDA for power distribution. The proposals are also cheaper than the Php1.24 kWh of Mactan electric, the lowest distribution supply metering tariff that’s under the traditional distribution system.

This bidding is proof that competition, as any economist worth his or her salt would know, would always benefit consumers. And competition in the distribution of power is what the Filipinos need to enjoy cheaper power rates. Although the game I talk about is not exactly in this context, but this recent bidding gives flavor to what I mean.

And since it is the start of the year, let me share my reflections on what can be done to achieve lower electricity bills for all of us.

We can start by allowing more franchise holders in a single area rather than stick with the current rules of only granting a franchise to one. The logic is simple. Firms vying for the same customer base will find ways to beat their competitors either concerning better service or price.

Unfortunately, allowing just one franchise holder per area fails to push the franchise holder to improve its services and offer competitive pricing. This is what monopoly does– leave the firm to dictate prices and be complacent in its service delivery. If several businesses are competing for the same customer base, then surely we can expect players to always be on their toes to find ways to beat other firms or electric cooperatives.

Our lawmakers can also review the rules for the Retail Competition and Open Access (RCOA), too. Present rules, after all, require that only those with 750 kWh or higher monthly peak demand or contestable customers can choose their power providers. This means those with lesser than 750 kWh or captive customers are not given that option.

But why should we single out those with higher consumption and not give the option to all power consumers to choose their sources and distributors? If indeed the consumers’ welfare is the top priority, then we should also allow captive customers this alternative. We need to have some solutions to what people expect to be “stranded assets.” This, surely, can be addressed. We just need creativity here.

These are just some of the changes we need if we want Filipinos to benefit from the essence of EPIRA, the law crafted to foster more competition in the energy sector. We need to make major changes if indeed the Filipino consumers’ welfare is of the utmost importance.

The New Year brings hope to all of us. And, it is my wish for the New Year that our regulators would see the critical role that competition plays in the energy sector and have the political will to make the changes needed.