THE 42 per cent reserve margin in the power sector is a burden not only to Tenaga Nasional Bhd but also to the consumer. In a well-developed and efficient electricity system, there is only a need for 20 to 25 per cent reserve margin to cater for sudden power outages and shutdown of plants due to maintenance.

As TNB is not involved directly in the planning of the planting-up programme, it is unfair to burden TNB if the planning is not right and there is excess capacity in terms of over investment. In other words, there is an excessive number of plants idling and yet, significant costs are incurred. A good analogy would be having a number of unoccupied condominiums.

The situation is likely to get worse. Next year, the new 2,100MW coal-fired Jimah power plant will be commissioned and this will push up the reserve margin to 47 per cent.

This is a case of over-investment and failure to consider the costs borne by society as TNB will pass on the extra costs to consumers. Otherwise, its bottom line will be affected.

Hence, industry watchers were puzzled by the recent statement by Khazanah Nasional managing director Tan Sri Azman Mokhtar that the country would face a power shortage by 2012 while the minister of energy, water and communications denied the accuracy of the statement.

Does Khazanah know some-thing the ministry or TNB does not? If what Azman said is true, then the planting-up process for new capacity has to start right away as power plants need at least three years’ lead time to be commissioned from scratch.

What Malaysia lacks is a good planning system for the power sector. Perhaps we can learn from Thailand.

Power planning there follows a two-step process. First, electric-load forecasts are generated to predict future energy demand. These forecasts in turn form the basis for a long-term power development plan that determines what centralised power plants are built and when.

Future-load forecasting is projected by the Thai Load Forecasting Committee comprising all stakeholders, including national utility companies and academicians.

In Malaysia, we are not sure who is in charge of deciding future capacity. The involvement of Khazanah in the equation complicates matters. Although the Economic Planning Unit is the designated leader, it has always faced challenges in terms of experienced staff.

Therefore, it is timely that a load-forecasting committee be established with the participation of all stakeholders to ensure that there will be no over-investment in the country’s power sector.

POLA SINGH, Kuala Lumpur

Source: NST – November 20, 2008