LIVING WITH KEPCO-SPC AND COAL
A Case Analysis
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EXECUTIVE SUMMARY
This is a case involving the worsening power situation in the Visayas at a time
when there were power shortages in terms of frequent rotating brownouts. It has been
pointed for the longest time that this energy crisis as one of the main reasons for
economic stagnation and under-development in the Visayas Region.
The direct solution to this power shortage problem was the conceptualization of a
joint local and foreign business venture by power generation companies or owners
named KEPCO, calling for the creation of the Cebu Power Plant Project. This energy
producing resource project is technically described as a 2 Unit x 103MW Fluidized Bed
Combustion (CFBC) that is a coal-fired power plant. On December 10, 2007, the owners,
KEPCO contracted with Doosan Heavy Industries and Construction Company in all
aspects of the power plant project such as engineering, design, procurement and supply
of equipment, to testing, commissioning and commercial run until its turnover after
completion within three and a half years.
The Cebu Power Plant project had faced its share of issues from the beginning
up to its opening mainly on its environmental impact. Environmental advocates used the
different media and were vocal in stating their case on the coal-fired plant’s toxic
emissions such as sulphur dioxide, greenhouse gases and deposits of coal combustion
waste, specifically coal dust.
During the Cebu Power Plant’s inauguration on June 27, 2011 by current
President Benigno Aquino, Jr., whose administration inherits a power problem at the
regional level, it was noted that the President was well aware of both compelling issues
as he addresses in his speech in recognizing the positive benefit of the energy producing
power plant to the economy of the Visayas region but not without adverse effects to the
environment. He further states that a more compelling and wide ranging problem was
addressed over a lesser yet still important problem.
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VIEWPOINT
The person tasked to oversee the main issue of power shortages in the Visayas
Region as the problem falls on the term of incumbent President Benigno Aquino, Jr., the
Department of Energy under him is responsible to find ways to source power to the
affected areas as well as implement regulation and standards on existing power supply
companies.
Such that since the power problem was addressed with the Power Plant project
as a solution, it produced another problem of environmental concern. The government
agency under him, the Department of Environment and Natural Resources is alternately
charged with overseeing the environmental compliance of local and foreign business
entities.
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TIME CONTEXT
The take-off point of the analysis for this case should be from the initiation of the
project on December 10, 2007 at a time when the energy crisis continued to exist and
there were also perceived environmental concerns, until its inauguration for commercial
operation on June 27, 2011, which at that point was the completion of the Cebu power
plant project as a remedy to the power shortage.
I.
PROBLEM STATEMENT
The problem is that the Cebu coal-fired plant being a needed solution to the
continuing power shortages but is given as the cause for environmental and health
concerns brought about by coal wastes affecting in some localities of Cebu province.
These concerns are highlighted by environmental activists and magnified
disproportionately by media to raise issue and attention calling for inclusion of proper
toxic waste management solution as priority agenda for government officials.
II.
STATEMENT OF THE OBJECTIVE
To sustain continued power generation of the Cebu coal-fired power plant with
the immediate prioritization on reduction moving towards effective elimination of toxic
wastes such as coal dust to acceptable levels by soliciting advanced methods of proper
toxic waste management and controls.
III.
AREAS OF CONSIDERATION
Strengths. On President Aquino’s inaugural statement of the Cebu power plant,
gave notice to an environmental concern and shows that a problem as such, may be
resolved thru concerted efforts by local and national sides. President Aquino showed the
way on how to face problems squarely and to follow through even on issues of concern.
Weaknesses. The difficulty as to who will be charged to address the
environmental concern, being that KEMPCO owns the Cebu power plant should be
forced to comply with environmental standards. Considering political concerns, to some,
addressing the environmental issue may not be worthwhile as the power plant is
perceive more positively for its benefits outweighing the environmental concerns.
Opportunities. The local governments thru enactment of laws and political will
should be able to address the environmental problem thru enforcing proper coal waste
disposal measures.
Threats. Using the environmental issue by the local officials of Cebu province to
their political purposes will hinder cooperation in the formulation and implementation of
environmental laws.
ASSUMPTIONS
It is assumed that having an environmental issue, politicians will be expected to
act either to neglect the problem as of small importance or using the issues to enhance
their political image. A political opposition will use the environmental issue to criticize the
incumbent leadership, the main purpose being the next election.
V.
ALTERNATIVE COURSES OF ACTION (ACA)
ACA1. With the continued operation of the Cebu power plant, KEPCO being the
owners should be afforded the opportunity to gradually implement proper waste
management programs. It is the responsibility of the company owners to address
the issue at the soonest but with consideration of the fact that KEPCO, in the
beginning of commercial operations of the power plant have yet to realize profit,
and funding for immediate unprogrammed maintenance operation such as
comprehensive waste management is difficult. As such, KEMPCO owners
should be reminded constantly of the environmental damage of coal wastes for
them to prioritize effective waste management program at the soonest.
ACA2. Immediate enforcement of existing environmental laws. National and local
environmental agencies can file civil cases or penalize the company if proven to
wilfully failed to address health concerns and environmental damage. Financial
penalties will force the power plant owners set their attention to prioritizing
effective waste management programs.
ACA3. Local government legislation in enactment of stronger environmental laws.
This may be the case when existing laws are outdated or the imposable penalties
do not pose a deterrent for environmental pollution and human health
endangerment violations.
ACA4. Closing down of the power plant facility until KEPCO investors meet
environmental obligations if proven that there is profound and irreversible threat
to human life and quality of living conditions.
VI.
ANALYSIS
Each ACA should be discussed in the light of the Areas of Consideration and
Assumptions. Advantages and disadvantages of each ACA should be identified
by way of considering the SWOT.
ACA1. With the
continued operation of
the Cebu power plant,
KEPCO being the
owners should be
afforded the
opportunity to gradually
implement proper
waste management
programs.
Advantages- Aside from the continued operation of the
power plant. The owners will be given the opportunity to
address the problem at their own expense and initiative.
KEPCO has the moral obligation to make sure their
business operation are not damaging to life and
environment.
Disadvantages – relying on the company to install more
expensive waste management technology issue may take
a longer time.
ACA2. Immediate
enforcement of existing
environmental laws.
National and local
environmental
agencies can file civil
Advantages – This course of action takes initiative from
DENR, the national agency for the enforcement of
environmental laws. This will also attract media attention
to put the company in bad light which may prompt them to
address the problem
cases or penalize the
company if proven to
wilfully failed to
address health
concerns and
environmental damage.
Disadvantages If the environmental laws to be
implemented are not too harsh. The company may opt to
just pay the penalties if they can afford to do so. This
delays the purchase of more expensive waste
management technology.
ACA3. Local
government legislation
in enactment of
stronger environmental
laws.
Advantages – The national and local legislators will play
a more active role in pursuing the enactment of stronger
environmental laws with stiffer penalties.
Disadvantages – This may take long time, if
environmental issues are not in the priority agenda of
legislators.
ACA4. Closing down of
the power plant facility
until KEPCO investors
meet
environmental
obligations if proven
that there is profound
and irreversible threat
to human life and
quality
of
living
conditions.
VII.
Advantages – this can give immediate resolution to the
coal waste pollution problem.
Disadvantages – This will further prolong the power
shortage crisis.
RECOMMENDATION
The first Alternative Course of Action (ACA1) calls for giving KEPCO, the
opportunity to follow through in the operational cleanup of the toxic mess produced by
the Cebu Power Plant. This proposes that some leeway be given to the company that
does not set deadline or time frame as to how soon they should be able to completely
contain the coal dust, but it does not absolve them from the issue rather no strict
compliance is asked from the company. This ACA is a passive measure that is not costly
in financial terms of implementation, it is easy to implement by sending a memorandum
or letter of compliance to KEPCO, and can be done immediately. The only drawback for
this ACA is the results which will depend on the response of the company, and may take
while before any action will be made.
The second Alternative Course of Action (ACA2) takes a more active approach
by which the problem is dealt responsibly by government agencies such as the DENR in
taking initiative to demand KEPCO for strict compliance to existing environment laws.
This ACA can is not costly because government resources are used such as lawyers,
environmental investigators will be commissioned or the cases may be filed against
KEPCO as it can turn into a legal battle. It can be somewhat easy to implement because
apart from legalities, there will also be political and media pressure that will expose the
failings of the Cebu Power Plant. Political and media factors will figure in this ACA and
results to action are dependent on strategic implementation of this ACA.
The third proposed Alternative Course of Action(ACA3) is a remedial measure to
correct existing weak environmental laws. In the national level, Congress can amend to
strengthen Clean Air Act of 1999. On the local level, the Cebu local council can enact a
provisional ordinance for the purpose of working out the implementation of stricter
standards of environmental compliance with stiffer penalties. This ACA is dependent on
political will, whether enacting environmental laws will be made priority of legislators. The
merit of this ACA lies on the fact that if penalties imposed by existing laws are affordable
for law violators, then the laws must be revised with more stricter and expensive
penalties so as to provide a deterrent and warning from violating the law once more.
The fourth Alternative Course of Action (ACA4) is a drastic measure, which may
be counter productive to the cause of energy crisis. Shutting down the power plant until
the damage to environment has been addressed sends a clear message that the
government is more serious on environmental issues. There is a process to this action,
as it has to be proven first that there is irreparable damages and threat to human life.
Comparative analysis of each ACA should be made by way of identifying the variables
and how each variable is rated for each ACA. Comparison is summarized by a
DECISION MATRIX, which will now show the ACA to be adopted
DECISION MATRIX (Multiple Criteria Decision Analysis)
4-Best
3-Very Good
2- Better
1-Low
Cost
Easy
to Immediate
Implement
Results
ACA1
4
3
2
ACA2
4
3
3
ACA3
2
3
1
ACA4
1
4
4
Time spent
Total
4
4
1
3
13
14
7
12
.
VIII.
PLAN OF ACTION
Based on extensive analysis of different alternative courses of action, it is
recommended that the plan of action to be executed will be ACA2 or the enforcement of
existing national and local environmental laws.
In following this course of action initially, the DENR which at the beginning of the
Cebu power plant project had given the environmental clearance for the project to push
through in 2007. It is therefore it is necessary for DENR to conduct some investigation as
to whether KEPCO, wilfully neglected its obligation in protecting the community from
harmful toxic wastes.
Based on reports, KEPCO made change orders to increasing the size of the
holding area and this containment minimized the leakages. But this is not enough, if
there are still leakages the DENR should then impose penalties as provided by law.
In the Philippines, there are enough laws and the key will be successful
implementation and enforcement of existing environmental laws. The government of the
Philippines should take the lead in protecting the habitat and lives of its people as well as
protecting the environment for future generations.