Monday, May 05, 2014  Energy Econ 20: On Slashing the Max Power
Generation Charge  When there is thin or very small power
reserves on peak demand hours of hot months April-May, there are
two options. (1) Have rotating brown outs, kill electricity
demand for a few hours in some areas; or (2) get expensive power
from peak-load plants like diesel barges and avoid brown-outs.
The P32/kwh max rate (usually for 1 or 2 hours, and used to be
P62/kwh) allowed in WESM (vs average price of about P5/kwh)
looks exorbitant, true. But if it will help avoid a brown out of
1 or 2 hours, it may look less merciless as other people would
describe it. So some businessmen are willing to invest in diesel
barges that may run only 1 to 3 hours a day (vs. base load
plants like coal and nat gas that run 24 hours a day), in
exchange for a higher generation charge.  Now there are moves by
the ERC and DOE to slash the max rate to only P6.25/kwh.  A
power investor will only put his money in base load plants that
run 24/7 and selling at P4