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Rough Cuts | Who’s got the chance for this ‘forever’

A year or two back there were submitted to the City of Davao these supposedly “innovative” ways of saving on energy expenses by the city government. And we are referring to the proposals by a government-controlled corporation (GCC) to install solar panels in local government buildings and place the facilities under the so-called net metering arrangement with the distribution utility; and the replacement by the same GCC of the existing sodium lamps on city streets with low energy consuming Light Emitting Diode lamps or LED.

According to the proponent of the measure, whatever will be saved by the city in terms of monthly electric bills once the projects are in place will be shared between the local government and the firm on a 20-80 percent scheme. That is, 20 percent will be retained by the city while the 80 percent will be remitted to the proponent government company. The twin projects were to be governed by a Memorandum of Agreement (MOA) between the city and the proponent GCC.

At first glance there is no doubt that any uninitiated Davaoeño will look at it as very beneficial to the city government. However, it was our view during that time that the City Council must have to evaluate the proposals in terms of the immediate cost the city will incur, as well as on the long-term requirements of the projects. And its objective assessment must be compared to the benefits that accrue the city under the present electric installation set-up.

We strongly believe then — and until today — that the City Council must first look into what conditions other than the 20-80 sharing of the savings on monthly energy cost. The honorable members of the Council must ask these questions to the proponent government corporation: Will the solar panels needed in all city buildings be given free? Will there be cost in the labor component of the panels’ installation as well as the setting up of the electrical equipment and other gadgets that will allow conversion of solar power into electricity with the appropriate utilization voltage?

We were — and still are — firm on our thought that the local legislative body must also look into the maintenance and replacement of busted panels. Will the replacements be provided for free by the proponent company? Will the maintenance of the panels and its interconnection with the city’s mainstream electricity provider be at the cost of the government firm?

The same questions must also be raised in connection with the offer of the same GCC to replace the existing sodium lamps on city roads with LEDs. Will the replacement bulbs be for free? Will the replacement of busted LEDs as well as the maintenance of street lights be also to the account of the proponent company?

From where we were perched, it was our view then — and still is now — that all of these issues should be thoroughly studied by the City Council before making a final recommendation to the Executive Department if indeed it is the robust treasury of the city that it is after should it allow the local government enter into such agreements with the proponent GCC..
And by the way how much is the city government paying the electric distribution utility under its current arrangement? We are aware that under Energy Regulatory Commission (ERC) rules government buildings are charged for its power use in certain category with fixed multiplier in the computation. Street lights are also billed on fixed monthly rates based on bulb wattage. Bulb replacements and maintenance of installations are also provided free by the local electric utility.

In the figure provided by the Council Energy Committee during the time the proposals were submitted for consideration, the rough estimate in energy consumption of the city was at P500 million. We supposed that it was on a per annum basis. That would translate to roughly a little over P40 million monthly power bills of the city incurred from the more than 30 thousand sodium street lights, office buildings, parks and play grounds, markets, transport terminals, and other city-owned facilities.

Now, how will the city compute the savings in energy its power bills? We are certain it will have to base its computation on a fixed estimated consumption under the current system with the power distribution utility. Say, if the actual present monthly billing is P40 million the savings will be the difference between the P40 million and the actual monthly bill when the solar panels are used to energize city-owned office buildings and facilities; and the LEDs are fully substituted on the sodium lamps in city roads. So, assuming that by then the electricity consumption of the city will be reduced to 50 percent from its present bills that would translate to about a little over P20 million in savings a month. If 20 percent goes back to the city coffers, then that would only amount to a little over P4 million monthly or roughly P50 million a year as compared to the share of the proponent GCC that would translate to a whooping P16 million a month. No sweat.

Such figures will definitely lure the superficially mathematically-inclined policy makers. P50 million in annual savings is P50 million. But then again, as we have advanced our unsolicited thought on the proposals, the City Council, before making any final decision, must be very definite that the cost of the solar panels, the labor in its installation, the acquisition of the replacement LED lamps as well as its installation and maintenance and subsequent replacements, be to the account of the proponent government power firm.
Should the costs be borne by the city then that would totally erase whatever supposed savings the local government can generate from the projects should these push through.

On the part of the GCC, it will continue to get their 80 percent share FOREVER. That is, for as long as the agreement is not revoked by the city government.

As we said earlier in this treatise, the proposals were submitted to the city government a year or two ago, assuming our recollection did not fail us. Meaning, the proposals could have been submitted earlier, or perhaps later.
Whatever happened to the twin proposals? Have these been decided by the City Council already? Are the projects put in place and operational? We now see some LEDs installed intermittently on poles along certain city roads.
Or, is the city government exploring other more viable options that would fairly attain its desired objective of saving on cost of its electricity bills without making other entities earn millions forever?

It seems nobody is talking or giving the public updates on such important plans of the local government.

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