Monday, October 24, 2016

AC Energy Holding eyes retail energy business

By Danessa Rivera (The Philippine Star) | Updated October 24, 2016 - 12:00am

MANILA, Philippines – AC Energy Holdings Inc. is dipping its foot in the retail energy business, initially targeting a 50-megawatt (MW) supply in the next three years in line with the full implementation of retail competition and open access (RCOA).
The Ayala power investment arm has established itself as a retail electricity supplier (RES) after getting the necessary license, AC Energy president and CEO John Eric Francia said.
“While we are small and I don’t think it would be significant, it’s worth mentioning we’re also going to be an active participant in retail electricity,” he said.
AC Energy does not intend to grow aggressively in the space, targeting to supply 50 MW at most in three years, the company official said.
“We’re not going to be big in the near term. This is just to get to know the business, we want to start serving some key customers. it will be on an opportunistic, case to case basis,” Francia said.
AC Energy will complement the existing RES firms of the Ayala Group under Ayala Land Inc.
Ayala Land’s RES – Direct Power and Ecozone Power Management Inc. – focuses on its own captive market while AC Energy will focus on the broader market outside the Ayala Group, Francia said.
Under the RCOA regime, end-users that are part of the contestable market, or contestable customers, are given the choice to choose their supplier of electricity aimed to foster competition in the generation and supply sector.
Originally, mandatory contestability for customers with peak demand of one MW is scheduled on Dec. 26, 2016 but this will be subject to change after legal hurdles for the implementation of the RCOA scheme.
Earlier, Manila Electric Co. (Meralco) sought court relief to stop the implementation of new RCOA rules, particularly distribution utilities (DUs) are not allowed to become a RES, requiring all DU-related local RES to wind down their businesses in three years or until expiration of their respective retail supply contracts (RSCs).
A local RES is defined as entities under a distribution utility (DU) that may engage in the business of supplying electricity to the contestable market without need of obtaining a license from the ERC.

P80-B subsidy needed to lower PH power rates

by Myrna Velasco October 23, 2016

The government will need to shell out at least P80 billion in annual subsidy for the power sector to gain that leverage of lowering rates to the level of the subsidized energy markets of Asian neighbors.
This has been the assessment of Australian consulting firm International Energy Consultants (IEC) and its prescription on the never-ending debate if there are measures that can be done to bring down power rates similar to those enjoyed by other countries.
Filipinos are incessantly complaining about perceived high electricity tariffs, despite recent result of the IEC survey indicating that power rates in the franchise area of Manila Electric Company (Meralco) had already been down 28 percent (excluding the value-added tax component) compared to 2012.
IEC Managing Director John Morris said “government subsidies continued to play to make power rates artificially low in markets like Thailand, Indonesia, Malaysia, South Korea and Taiwan.”
For these five countries, their aggregate subsidies for electricity had been estimated at $50 billion for 2015 alone.  South Korea funneled the biggest subsidy at $18.4 billion; then Indonesia at $12.8 billion; Taiwan at $8.5 billion; Thailand at $5.1 billion; and Malaysia at $4.3 billion.
Morris said the equivalent subsidy of these specified countries as integrated in their power rates had been 4.2 US cents or R1.96 per kilowatt-hour.
Amid the harrowing fiscal smash of such subsidies in the government budgets of these countries, their cheaper electricity rates remained an interminable envy of Filipino consumers.

DOE asked to define energy mix

by Myrna Velasco October 23, 2016

The Department of Energy (DOE) is now being asked the tough questions as to the specific parameters of the proposed energy mix policy so investors can be properly guided on ongoing and future projects.
AC Energy Holdings President ad Chief Executive Officer Eric T. Francia said the energy mix “is clearly the big picture” when it comes to policy agendas that the current administration must work on, but until now, the details have been blurry.
He said investors, especially in the power sector, have been batting for clarity and a lot of the specifics that must go with that proposed policy.
“When you say energy mix, it’s not only the high level goal but implications on the how. And do you do it by technology? What is really their (government) stand, what’s the role of each technology and what’s the framework? So we can be properly guided,” Francia stressed.
If explanation of policy ramifications can just be done intelligently and the details provided so it can be suitably fleshed out by industry players, he opined that an energy mix framework may just be instituted via an Executive Order, not even a legislated measure.
“But then again they need to clarify and let us understand… for instance, their (DOE’s) push for LNG (liquefied natural gas) at the end of the day… the role of coal, because we’re getting mixed signals from different parts of the government,” Francia said.
He added “that’s important to guide us – the investors – on where things are headed.” In the case of renewables, the Ayala Group executive emphasized that the DOE and other concerned agencies must already start taking serious steps on the enforcement of the Renewable Portfolio Standards.
For coal, Francia reiterated “what is the government really saying? Because I understand that DOE is still open to building base load, competitively-priced coal plants but they should clarify that. At least, it’s clear – we know that it’s supported even that of their equivalent agency at the DENR (Department of Environment and Natural Resources). They should build the rules around that policy, there’s still lack of clarity in this.”
Joseph Nocos, vice president for Business Development of Alsons Power Group, proffered that “in the medium to the long-term, the country will need to develop intermediate and peaking capacities.”
He expounded “power demand will grow to an extent that will necessitate the development and implementation of LNG strategy. That will further diversify our energy mix and rationalize project cost.”
Nocos emphasized aside from power generation being the core market, the incursion of LNG in the energy mix could also “pave the way for the use of gas in industrial and commercial applications.”
He further averred that nuclear could be an option, but “that requires and deserves extensive study to establish its technical and economic feasibility,” stressing that ‘such study should have safety as a primary consideration.”