Rising cost of electricity

Title

Language

English

Source

The Republic I (6) 1-31 December 1975

Year

1975

Subject

Electricity

Power resources -- Philippines

Electric power -- Philippines

Electric utilities -- Costs

Rights

In Copyright - Educational Use Permitted

Fulltext

THE REPUBLIC Energy: some blunt facts about sources... THE power situation in the Philip pines is much worse than we have always thought it was. We always said before that fossilfired generators or generators of ma chines that produce electricity consti tute 75 percent to 85 percent of our sources of energy. That is not true. What is true is that 94 percent of our energy or our electricity is right now produced by fossil-fired generators. And it will serve no purpose for anyone, in any way, to mislead our people. It is now necessary to inform our people pointblank, frankly, and can didly, that only six percent is produced from hydroelectric power. And it is now the program of government to move as fast as possible into the generation of electricity from hydroelectric sources as well as from the geothermal sources that we are developing right now. There have been optimistic fore casts about our converting our entire country into consumers of electricity that would come from non-fossil fired generators by 1985. This just isn’t pos sible. It is not possible to convert the entire country into a country that will utilize only hydroelectric and geother mal power within the next 10 years. Even if we were to bankrupt our selves—bankrupt the government and the private sector—we could not do it. The most reasonable and feasible solu tion—the compromise that we may ar rive at—would be to reduce the fossilfired generators from 94 percent to 75 percent by 1985. That’s quite a big letdown isn’t it? But I thought it necessary and wise to - e'ur pccpk ci. the '". .is. I’m al ways horrified when I read that there are ambitious government-programs to con vert the sources of electric power by 1985 into non-fossil fired generators. This raises false hopes among our people. We must accept the reality that while we were paying P2.2 billion be... and about savings LAND transportation and industry ac count for 35 percent and 32 percent, respectively, of all petroleum consumed in the country. > Power generation accounts for 18 per cent. Meralco alone consumes 14 percent of the 18 percent. Shipping, aviation, fishing, and other sectors account for less than 10 per cent of the balance. Thus, the greatest savings in energy use will come through eliminating waste ful consumption of petroleum fuels in cars, trucks, and buses as one class; sec ondly in industry; and thirdly, by con serving electricity, particularly in the Metropolitan Manila area. These three sectors together account for over 80 per cent of all petroleum use in the country. Simple, isn’t it? Eighty per cent of all the petroleum consumed in the coun try is in the hands of those who drive cars, trucks, and buses; in the hands of those who are in industry; and of those who live in Greater or Metro Manila. This would make it simple for any one to plan and say: “All right, all of you therefore, cut consumption by 10 per cent or, say, 50.per cent.” But the plans are easier to make than to imple ment. There are many steps that can be taken by everyone right now to elimi nate wasteful consumption of petroleum. The momentum of the energy con servation movement—which was, of course, started way back in 1973 when we had the system of allocation of gas fore the oil crisis, we are now paying P7.2 billion every year. From $200 mil lion, we are now paying $840 million. And before the next year is over, we will be paying about $1 billion. These are sobering facts. In fact, all those who study these figures cer tainly are shocked into the realization that we are tardy in taking precautions against this problem getting out of hand. While we are in the process of ex ploiting our geothermal and hydroelec tric potential, we are also moving into nuclear power generation. We are pres ently studying the impact of a costly nuclear power plant which may cost as much as $100 million or $1 billion inso far as it may curtail other projects in our country. For, while our credit is good, we can borrow only so much ev ery year. And this year, it may be necessary to allocate these credits to various projects we have in mind. One happy development is that we have now discovered nuclear deposits or uranium deposits in the Philippines. The Philippine Atomic Energy Commission has successfully processed Philippine uranium ore and produced the formula of u-38 by a completely Filipino team. The potential sources of uranium in the Philippines on geology considera tions are: (1) Camarines Norte, (2) Sa mar, (3) Ilocos Norte, (4) others, like Negros and Mindanao. For every 600 megawatt nuclear power plant, we need 60 tons of urani um per year. It costs presently $32 per pound, and the price is still on the rise. Whether it is oil, uranium, or even the machinery for geothermal units for hydroelectric power, the production cost of energy is going up. Across this broad terrain of escalating prices, therefore, the logic of conservation becomes more valid and urgent. - PRESIDENT MARCOS at launching of ENERCON movement —was somehow lost. And now it is nec essary to regain the momentum. National demand for petroleum in 1974 was successfully reduced to 65 million barrels which was five million barrels less than 1973. But I am inform ed by the Philippine National Oil Com pany that the country will consume about 72 million barrels in 1975, which will be 10 percent more than 1974. And consumption in 1976 is projected to grow by another 11 per cent to 80 million barrels, unless the energy conser vation program is successful. Let us remember that every barrel of oil saved means over $ 12 of import savings and every percentage of con sumption that is saved means over a $9 million for the country. 1 appeal to everyone for their fullhearted participation for the national economic reasons that I have already mentioned, knowing that each individ ual effort at saving of energy redounds to his own benefit as well as that of the country. I am prepared to implement appro priate economic sanctions against those who waste energy, but 1 hope that this can be kept to a minimum. It is best that the State and the government do not step in, but that our people develop the capability to face up to a challenge and to a crisis without proddings or the coercive power of government. - PRESIDENT MARCOS at launching of ENERCON movement new oil laws HE thrust of the governmerit’s oil conservation measures is to offset the additional $ 100 million in the coun try’s oil bill as a result of the OPEC oil price increases. To achieve this, President Marcos has issued the following directives: Letter of instructions No. 328 (Issued on 27 October 1975) Under this Letter of Instructions, all government agencies were required to: —reduce their oil, electricity, and power consumption by at least five per cent except in cases where it would prejudice the national interest; —desist from putting up Christmas displays or lights that consume electri city; —avoid the purchase and use of big cars which are heavy users of gas and oil; and —shut off all neon, advertising, and building lights not later than midnight daily except those that are needed for the protection and security of their premises. LOI 328 also specified tasks for the following government agencies: THE DEPARTMENT OF INDUSTRY a. To direct all industrial plants, factories, commercial establishments and other entities consuming at least P3-million worth of fuel, oil and power yearly to formulate and submit compre hensive programs of power and energy conservation, the administration and im plementation of which the DOI shall monitor. b. To study, formulate, and rec ommend to the President, standards on energy use for industrial plants and fac tories. c. To review the country’s national development plans and attune these to available energy resources, in collabora tion with the National Economic Devel opment Authority and the Board of In vestments. THE PHILIPPINE NATIONAL OIL COMPANY, THE NATIONAL POWER CORPORATION, AND THE NATION AL ELECTRIFICATION ADMINIS TRATION. To organize a pool of engineers and combustion efficiency experts to assist industrial concerns and factories in de veloping their conservation programs THE DEPARTMENT OF FINANCE To review and study taxes for items considered significant power-users —such as big automobiles, sports cars, gasoline-powered trucks and luxury ap pliances—and recommend to the Presi dent the necessary imposition of taxes and policies to discourage the use of uneconomic machines. The LTC was to . review the registration fees and require ments for such cars and trucks, and n^ake recommendations to the President. THE DEPARTMENT OF TRADE To study and promulgate regula tions on the use of all types of lighted advertising signs, particularly neon lights. Initially, the Trade Secretary was to prohibit the operation of all types of lighted advertising beyond midnight THE LAND TRANSPORTATION COM MISSION The LTC, the Philippine Constabu lary and all police agencies were to strict ly enforce all laws and regulations pro hibiting the operation of dilapidated, unroadworthy and inefficient motor vehicles and to intensify traffic-flow improvement campaigns. The Defense Secretary was to make available the authority and resources of his office to other government agencies to insure that power conservation and efficient fuel and energy utilization programs, regulations and directives are enforced. Letter of Instructions No. 329 (Issued on 27 October 1975) This decree enjoined the entire country to conserve fuel and energy, or face gas rationing. It also directed the Commission on Audit to inform govern ment officials and drivers that the un authorized use of government vehicles is punishable with the arrest of violators. Letter of Instructions No. 339 (Issued on 20 November 1975) Under this LOI, the President di rected the Philippine National Oil Com pany to be responsible for implementing the government’s comprehensive pro grams for the development and use of the country’s coal resources as an alter native source of energy. ON 11 December 1975, President Marcos launched the “Energy Con servation Movement” in Malacanang. This is a loose organization of private corporations and associations organized by the Philippine National Oil Company. On launching the movement, the President issued three Presidential de crees designed to deter wasteful and uneconomic use of fuel. Presidential Decree No. 843 Under this, the annual registration fees for private automobiles were fixed in accordance with their factory or seat ing weight, as follows: Presidential Decree No. 844 PD 844 imposed an energy tax on private non-commercial aircraft. Presidential Decree No. 845 This decree imposed energy tax on motorized watercraft used for pleasure and recreation. It also amended the the Tariff and Customs code. On the same occasion the Presi dent also issued Presidential Decree 846 which required all sectors of mass media to participate actively in the in formation and educational campaign for the conservation of fuel by providing for free space and time in their newspapers or on radio and television stations. □ Rising cost oS electricity MERALCO, which consumes about 14 percent of the Philippines’ total oil imports, paid only $1.68 per barrel (C & F) for our oil imports in 1960. In 1972, the cost per barrel had risen to only $2.15. In 1973, it rose to $3.00 or P26.15 per barrel. In March of 1974, it had risen to $9.55 or P83.62 per barrel. Up to October of 1975, the price had escalated to over $ 11.00 per barrel, and now it is more than $12.00 per barrel. The Philippines is in the unhappy position of depending almost entirely on imported oil to propel its economy. We have large rivers and waterfalls, and coal of low heating value, but all those contribute only eight per cent of the energy we need. In 1964, we were importing only 30.8 million barrels of oil. In 1973, oil imports rose to 65.9 million barrels. In 1964, the country’s oil bill was only about $61 million dollars. In 1973, it was $198 million dollars. In 1974, it had risen to $750 million dollars. In 1975, it will be about $840 mil lion dollars; and in 1976, it is estimated to escalate to $980 million dollars at present OPEC prices. Considering that our country’s total foreign trade in 1974 was about $5.8 billion dollars, of which $3.1 billion dollars was for imports, oil represented about 24 per cent of our import bill. In 1975, the cost of oil is about 27 per cent of our import expenses. In 1976, it will represent about 32 per cent. □

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