“On this blog, we will provide basic facts about the fire and will share any new information that develops,” wrote Fire Chief Chip Prather.

“More important, though, this is the place for you to ask the questions that are on your mind and have them answered. For example, if you do not understand some aspect of the way we fight fires in general or fought this fire in particular, this is the place to ask about it. If you have concerns about decisions made, tell us, and we’ll do our best to explain.”

It’s been a while since I’ve banged on Meralco for not engaging with its customers on-line with some significant level of authenticity. Can you imagine the benefit for both us and Meralco if they said and did something like the above, on a blog, except related to their business?

The world is already so far into this quickly maturing communication mode that Meralco’s inactions are beginning to border on willful neglect, with shades of liability. We are moving quickly into an era where we expect our public institutions and utilities to provide us the opportunity to interact with them and be better informed. The old mechanisms for this are rapidly becoming outmoded.

As if they needed more justification, the figurative fire will be ablaze soon enough again with Meralco. Now is the time to establish the on-line relationship.

I’m not sure what P3 billion (about US$60 million) positions them for. Last year they spent US$90 million on a 34% interest in STEAG. But they probably have their eye on something specific.

By the way: If my calcs are right, it seems to me that last year’s STEAG acquisition places the STEAG plant value at $1,165/kW based on 232 MW (or $1,351/kW if based on a nominal 200 MW).

In the U.S. I spent many years working for and consulting with Generation & Transmission Cooperatives (G&Ts). However, the fundamental drivers for joint action and our whole sector structure are drastically different here than in the U.S. Here’s the cover of the final report I submitted to NRECA:

Yesterday, I met with NEA Administrator Edita Bueno to brief her and other NEA executives on my findings. Although much of the message was delivered verbally, you can view or download a copy of the slide deck my colleague Viking and I used by clicking on the image below.

IMO, the most important slide is #29.

Click the image to view or download a copy of the presentation deck.

The seven ECs on Panay and Guimaras are in the midst of procurement for an aggregated 90 MW of base and intermediate load resources beginning in 2011 when their NPC Supply Contracts expire.

Besides giving an overview of what we did on Panay, I provide some fundamental points relating to EC procurement in general:

• The ECs - through the NPC tariff - have been and are paying a lot of money to NPC to do their procurement for them.
• Procurement is just one element of many power supply activities that NPC previously conducted and that ECs must now continue to do on their own - and pay for on their own.

These “power supply activities” include:

1. Planning
2. Procurement
3. Contract Management
4. Dispatch Services

A subtle point I’ve been trying to get across to as many people that will listen is that in the past, the costs associated with those four activities have been (easily) passed through to retail customers through the regulated NPC cost-of-service tariff. The problem facing the ECs right now is that no such mechanism exists that easily passes through these same costs as incurred by distribution ECs.

The need for conducting these activities doesn’t just disappear under EPIRA - but the responsible party will no longer be NPC. If the ECs include them in their cost of service, it doesn’t increase costs to end-users - it replaces the costs that end-users were paying NPC for.

I have a strongly held belief that bulk power supply joint action on behalf of the Philippine electric cooperatives (ECs) will transform the EC sector. Executed diligently, it has the potential to lead the way forward out of a morass of power supply problems we’ve been encountering since the early 1990s. It has been enabled by EPIRA.

Roughly 70% of the revenue ECs collect is for power supply. It’s doesn’t take the aggregation of very many ECs before you have a power supply entity on the order of P50 P5 billion revenue per year and much larger. That’s a large business. It’s leaves a footprint in the market place. It’s wields market power. It can certainly influence the direction our future power supply will take.

This is influence the ECs have never really had before in our history.

The future of Philippine generation supply will be determined by a partnership among such EC entities, the DOE, and the ERC. The IPPs will come and go and will influence the process too, but they are not in a position to lead us. It will be the large power procurers (the EC power supply entities and Meralco, primarily) in partnership with DOE and ERC that will define our future.

Earlier this year, NRECA International, many of who’s senior executives have long shared a similar idea, provided enough funding to me to be able to spend the most part of several months working and talking and thinking about the specific issues related to this vision and how it might be executed within the Philippine situation. The results were delivered in a report to NRECA and many of those conceptual findings will begin seeing their way into general circulation within the sector, through my own releases of White Papers and presentations and coffee shop discussions.

So if you want to stay abreast of the discussions I’ll be releasing, subscribe.

My work is now not funded - but it doesn’t stop. I’m freely giving away whatever thoughts and ideas I have, but it takes a community of us working on this, exchanging ideas and concerns. Almost every time I engage with a Board Member or GM or regulator or NEA executive or local and foreign consultants on this subject, I get my eyes opened or reminded about a problem or bottleneck that has to be addressed.

This blog is one area where various interested people, including other consultants working in this space, can communicate. It is but one plank in what I’ve referred to as an architecture of participation that we need to build out. For more on my general philosophy for this site and my practice, see the rest of my Essential Posts.

I’m seeking engagements within the sector that allow me to work on this vision. As one example, the Panay-Guimaras Power Supply Consortium (PPSC) hired me for two months earlier this year to continue my advisory on structuring their power supply procurement process which previously had limited support through the the NRECA project I mentioned above. Procurement is but one component of EC power supply activities and the approach PPSC is taking is a pioneering but initial and limited transitional step toward a vision I referred to above. The consortium approach has its own strengths and weaknesses, but it is, nevertheless, a bold step by the ECs involved.

Of course, any engagement on any issue, large or small, is welcome. I’m currently working about 20-25% time for NRECA, helping to coordinate a three year technical assistance project to the ECs regarding procurement of financing for investments related to system loss reduction. They all contribute to my ability to economically remain active in this area and continue providing support to those that share an interest in my vision of the sector.