Thursday, April 24, 2014

SPOT MARKET PRICE CONTROLS: Cost-recovery provisions for affected gencos urged

SPOT MARKET PRICE CONTROLS
Cost-recovery provisions for affected gencos urged
By Riza T. Olchondra
Philippine Daily Inquirer
7:34 am | Thursday, April 24th, 2014

MANILA, Philippines—Amid proposed additional price controls at the Wholesale Electricity Spot Market (WESM) by state regulators, SMC Global Power Holdings Corp. is pressing for cost-recovery provisions for generation companies (gencos) whose operations will be affected by the scheme.
SMC Global was responding to an invitation for comments from industry players from the Energy Regulatory Commission (ERC), the state regulator, on its proposal to put a secondary price cap at the WESM to temper any price surges for the months of May and June 2014.
The ERC has proposed that the WESM clearing price be lowered to P6,245 per megawatt-hour, or P6.24 per kilowatt-hour, when average prices breach the threshold of P7,808 per mWh, or P7.808 per kWh, over a 72-hour period. This move could cut spot market prices by 20.81 percent overall.
Basis for price cap
In its comment, SMC Global, a wholly owned unit of San Miguel Corp. (SMC), said the state energy regulator should clarify the basis for the proposed secondary price cap.
It said plants with production costs which are higher than the secondary cap, and hydro-electric plants which have high fixed costs, should have an option that would give them additional compensation.
SMC Global said the proposed changes do not include a provision for the filing, and methodology for the determination, of additional compensation when the short-run marginal cost (SRMC) is above the secondary price cap. The SRMC refers to the change in short run cost due to an “extremely small change” in output.
The WESM is designed such that distribution utilities like the Manila Electric Co. (Meralco) and other buyers can get additional supply whenever electricity demand is higher than what they contracted from power plant operators.
Existing rules prioritize power suppliers with the lowest price offers for electricity buyers. However, the price paid is based on the last offer made to meet the demand, although a ceiling (called the “bid cap” or “price cap”) is set.
WESM abolition
Meanwhile, party-list Rep. Neri Colmenares (Bayan Muna), who has called for the total abolition of the WESM, said the proposed changes at the WESM are just regulators’ “knee-jerk” reaction to growing public criticism of recent electricity price spikes.
“These regulators should have lowered the price cap years ago considering that since the enactment of the Electric Power Industry Reform Act (Epira) the cost of electricity has increased by 112 percent,” Colmenares said.
“To prevent this from ever happening again the WESM should be abolished and power generators and distributors should be regulated. The pricing of power should also be regulated and subjected to a public hearing to ensure consumer participation, it should not be automatic,” he said.
The ERC, Department of Energy, and WESM operator Philippine Electricity Market Corp. (PEMC) make up the WESM tripartite committee that monitors price volatilities on the spot market.
Consumers have been up in arms in recent months when tight power supply and high WESM prices resulted in a record generation charge hike of P4.15 per kWh in the electricity bill of Meralco customers last December.
Citing the impact of the maintenance shutdown of the Malampaya gas plant and WESM price spikes amid tight power supply, Meralco last December sought, and was granted, a rate increase of P4.15 per kWh to the generation charge. source

SC order on Meralco rate hike seen to diminish inflation risks

By Kathleen A. Martin (The Philippine Star) | Updated April 24, 2014 - 12:00am

MANILA, Philippines - The latest Supreme Court decision extending the stay order against Manila Electric Co.’s planned power rate hike will diminish the upside risks to inflation, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said yesterday.

Tetangco told reporters in a text message the recent SC decision is not seen affecting the BSP’s inflation forecast for the year.

“Our latest baseline forecasts did not consider the power rate hike that is under the SC TRO (temporary restraining order). But we flag it is as an upside risk, given the uncertainty surrounding its resolution,” Tetangco said.

“Thus the forecasts are not affected but this will help lower upside risks – all things remaining the same,” he continued.

In March, the central bank revised its inflation forecast for 2014 to 4.2 percent, slower than the 4.3 percent projection announced in February.

It was lower than the 4.5 percent announced in December due to the delay in the implementation of Meralco’s electricity rate adjustment.

However, the forecast is still above the midpoint of the BSP’s three-to five-percent target range.

During the BSP’s last policy setting meeting last month, Tetangco said inflation expectations for this year until the next have remained manageable although the central bank continues to be watchful of potential price pressures.

Upside risks to inflation were identified to be Meralco’s petition for electricity rate adjustment and possible increases in food and oil prices.

Inflation eased to 3.9 percent in March from 4.1 percent in February due to lower price increases seen in housing, water, electricity, gas and other fuels.

This brought the three-month average to 4.1 percent, still above the midpoint of the central bank’s target range.

The BSP said it will be mindful of shifts in monetary policy settings in other economies, geopolitical risks, and world economic growth prospects that may have an impact on domestic inflation. source

SC order on Meralco rate hike seen to diminish inflation risks

By Kathleen A. Martin (The Philippine Star) | Updated April 24, 2014 - 12:00am

MANILA, Philippines - The latest Supreme Court decision extending the stay order against Manila Electric Co.’s planned power rate hike will diminish the upside risks to inflation, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said yesterday.

Tetangco told reporters in a text message the recent SC decision is not seen affecting the BSP’s inflation forecast for the year.

“Our latest baseline forecasts did not consider the power rate hike that is under the SC TRO (temporary restraining order). But we flag it is as an upside risk, given the uncertainty surrounding its resolution,” Tetangco said.

“Thus the forecasts are not affected but this will help lower upside risks – all things remaining the same,” he continued.

In March, the central bank revised its inflation forecast for 2014 to 4.2 percent, slower than the 4.3 percent projection announced in February.

It was lower than the 4.5 percent announced in December due to the delay in the implementation of Meralco’s electricity rate adjustment.

However, the forecast is still above the midpoint of the BSP’s three-to five-percent target range.

During the BSP’s last policy setting meeting last month, Tetangco said inflation expectations for this year until the next have remained manageable although the central bank continues to be watchful of potential price pressures.

Upside risks to inflation were identified to be Meralco’s petition for electricity rate adjustment and possible increases in food and oil prices.

Inflation eased to 3.9 percent in March from 4.1 percent in February due to lower price increases seen in housing, water, electricity, gas and other fuels.

This brought the three-month average to 4.1 percent, still above the midpoint of the central bank’s target range.

The BSP said it will be mindful of shifts in monetary policy settings in other economies, geopolitical risks, and world economic growth prospects that may have an impact on domestic inflation. source

The full cost of energy

A GREAT BRITISH VIEW By Asif Ahmad (The Philippine Star) | Updated April 24, 2014 - 12:00am

Energy prices have hit the headlines. Consumers are not happy. The media is angry. The government is wrestling with long term policy challenges around competition, renewables and security of supply. I am, of course talking about the UK. But I could just as easily be talking about the Philippines. Energy challenges are tough. The right policy requires finding answers to the question — what is the full cost of energy?

There is the price that we as consumers are charged through our monthly energy bills. In the UK, we are acutely aware of the social price that is paid when consumers, particularly those who are vulnerable, pay a high proportion of their income in energy bills — known as “fuel poverty.” Britons need energy to keep warm. The Philippine Institute for Development Studies estimates that up to 16 million people in the Philippines have no access to electricity. Millions more want to switch on a light, charge a phone or power fans.

In the UK, we are tackling the problem of costs by addressing imperfections in the energy supply and distribution markets. By making it easier for consumers to switch suppliers, encouraging competition and welcoming foreign investment, we believe we can offer consumers a better deal. Our experience in Britain tells us that the nationality of our utility companies is immaterial. We benefit from global capital, technology and greater choice. Helping consumers become more energy efficient is another big part of the plan.

While consumers want cheap bills, investors require reasonable returns. Get this balance wrong and energy shortages are the result. The price of power outages and insufficient supply is paid by many. The social costs are high but the economic costs, reduced economic activity and jobs, are higher still. The most important factor is certainty: when investing for 20 to 30 years, energy companies need to know that the policy and regulatory environment will set prices that allow them to make a return on the capital they have risked.

Some argue that subsidies are the answer to keeping costs down. But the Philippines is ahead of the curve by not having open ended support mechanisms. Subsidies mean that the consumer pays the price twice, once through their bills and again through their taxes. Subsidies create perverse incentives that have very negative economic effects, especially in the developing world and disproportionately benefit richer members of society. Subsidies are unaffordable and become overtly political.

There are costs to the planet too. An over-reliance on fossil fuels, in particular coal, is one of the prime causes of global warming that is perhaps the greatest risk the Philippines faces. Typhoon Yolanda was a shocking example of the greater intensity of weather we now face. The cost of climate change, if it is not tackled by every single country, will be catastrophic. Gas is cleaner, even though it can require more upfront investment to put in place the necessary infrastructure. The Philippines has further potential in renewables including solar, biomass and geothermal sources.

There is no one solution to energy policy. Countries face difficult choices to balance the range of risks and opportunities. There are, however, some policy principles that can work for all of us. Competition and smart regulation is better at delivering energy at affordable prices than subsidies or monopolistic, public or private, enterprises. Short term price caps may appear attractive but there is a longer term price to be paid if investors are discouraged and capacity fails to keep up with demand. An even bigger cost will be to the environment if carbon emissions and wasteful use of energy increase on current trends.

Each country must find its own route to energy and climate security. Around the world, the public, governments and businesses need to weigh up the full cost of energy in search of solutions.

* * *
source
(Asif Ahmad is the British Ambassador.)

SMC Global wants WESM rules to allow recovery of add’l costs

By Iris C. Gonzales (The Philippine Star) | Updated April 24, 2014 - 12:00am

MANILA, Philippines - SMC Global Power Holdings Corp., the power generation arm of San Miguel Corp., is asking the Energy Regulatory Commission (ERC) to allow power plants to recover additional costs should they incur any if the ERC approves the proposed secondary price cap for the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity.

The price cap is the highest offer that sellers can give when they sell their electricity to the WESM. Power suppliers in the market with the lowest price get to supply the requirements of distribution utilities but the last offer is the one that sets the price for which they will be paid.

In a position paper submitted to the ERC regarding the proposed secondary price cap, SMC Global said: “Another paragraph should be inserted in the proposed resolution to allow for the recovery of additional costs if the additional costs exceed the SRMC or the short run marginal cost. The additional costs should allow for the recovery of fixed costs.”

The SRMC refers to marginal cost of operating a power plant.

The ERC wants to impose a secondary price cap for the WESM.

Thus, the ERC proposed a resolution imposing a secondary price cap of P6.245 per kilowatt-hour for the WESM upon reaching an average price threshold.

ERC has sought comments from power companies and energy stakeholders on the proposed secondary price cap.

In its position paper, SMC Global said the proposed secondary price cap should be applicable only to the base-load and mid-merit plants while the peaking plants should be priced at P32,000 per megawatt-hour (mwh) or P32 per kilowatt-hour (kwh) if this is the clearing price.

“In other words, if the clearing price is P32 per kwh, only the peaking plants will be settled at this price, the base load and mid merit plants will be settled at the secondary price cap,”

In the proposed resolution, the ERC said the secondary cap may be lifted whenever the rolling average is less than the defined threshold

Pending the approval of the offer cap of the WESM tripartite committee, the ERC said there is a need to mitigate the sustained high prices in the WESM on an interim basis during the months of May and June.

Any secondary price cap and average price threshold approved by the ERC shall be revised accordingly upon the approval of the final WESM offer cap, the ERC also said in its resolution.

The price cap at the WESM has been cut by half since December but only on a temporary basis.

In December, the tripartite committee composed of the Department of Energy, the Philippine Electricity Market Corp. (PEMC) and the ERC cut the price cap at the WESM to P32 per kwh from P62 per kwh amid the surge in electricity prices that month.

At the time, the December generation charge of Manila Electric Co. (Meralco), the country’s biggest power distributor, rose to P9.10 per kwh from only P5.67 per kwh in November.

This temporary price cap has been extended for 60 days from March 27 or until May 27. source

Wednesday, April 23, 2014

Inflation pressure eases with power rate hike TRO

Business World Online
Posted on April 23, 2014 10:53:24 PM
By Bettina Faye V. Roc, Senior Reporter

THE INDEFINITE extension of a restraining order against a hefty Manila Electric Co. (Meralco) rate hike will reduce pressure on inflation, the chief of the Bangko Sentral ng Pilipinas (BSP) yesterday said.

Central bank Governor Amando M. Tetangco, Jr. said monetary authorities, when they trimmed inflation outlooks for this year and the next last month, tagged the Meralco rate hike as an “upside risk.”

“Our latest baseline forecasts did not consider the power rate hike that is under the SC TRO (Supreme Court temporary restraining order). But we flag it as an upside risk, given the uncertainty surrounding its resolution,” Mr. Tetangco said in a text message to reporters.

“Thus the forecasts are not affected but this will help lower upside risks.”

The SC on Tuesday issued a new TRO on Meralco’s pending power rate hike, indefinitely halting the implementation of a P4.15 per-kilowatt-hour increase the distribution utility wanted to implement in stages starting last December.

The Monetary Board, during a policy-setting meeting last March 27, among others trimmed its inflation forecasts for this year and next. It said the annual rise in consumer prices would likely average 4.2% this year, down from February’s 4.3%, while the forecast for 2015 was cut to 3.2% from 3.3% previously.

The BSP’s inflation target ranges for this year and the next are 3-5% and 2-4%, respectively.

Mr. Tetango then said the balance of risks to the inflation outlook “continues to be skewed to the upside” given the pending power rate hike and possible increases in food and oil prices.

Earlier this month, he also cited uncertainty as to when supply-side pressures would dissipate and noted possible second-round effects as risks to the inflation outlook.

Even as inflation slowed last month, Mr. Tetangco said the room to keep interest rates steady remained “narrower” as these factors, coupled with growth in money and credit in the financial system, could give monetary authorities a reason to tweak policy.

Inflation settled a four-month low of 3.9% in March, within the BSP’s 3.7-4.6% estimate and down from 4.1% in February.

The Monetary Board, at its March 27 meeting, also kept overnight borrowing and lending rates at record lows of 3.5% and 5.5%, respectively, citing a manageable inflation outlook.

Monetary authorities, however, decided to hike banks’ reserve requirement ratio by 1%, a move meant to help keep both liquidity and credit growth in check.

The adjustment, which took effect last April 4, is expected to siphon off about P60 billion of money in circulation, would allow liquidity growth to “normalize” to about 15-17%, the central bank has said.

Domestic liquidity or M3 -- the broadest measure of money in the system -- rose by 36.4% to P6.928 trillion in February. It was slower than the revised 37.3% expansion recorded in January -- the fastest rate on record.

Analysts have said that the hike in reserve requirements signals the start of a tightening cycle. The Monetary Board next meets to discuss policy on May 8. source

Changes to planned WESM cap sought

Business World Online
Posted on April 23, 2014 10:52:33 PM
By Claire-Ann C. Feliciano, Senior Reporter

THE POWER UNIT of conglomerate San Miguel Corp. wants regulators to expand a cost recovery provision under a planned secondary price ceiling for power traded at the Wholesale Electricity Spot Market (WESM).

Proposed provisions of a planned secondary cap will benefit some firms more than others, a San Miguel unit said.

This was in response to a draft Energy Regulatory Commission (ERC) resolution that calls for a cap of P6.245 per kilowatt-hour (kWh) once an average threshold of P7.808/kWh is reached over a 72-hour period.

The WESM currently has a P32/kWh offer limit, also an interim ceiling that is almost half of the P62/kWh set when the market started operations in 2006.

In a comment submitted to the ERC, SMC Global Power Holdings Corp. said “another paragraph should be inserted in the proposed resolution to allow for the recovery of additional costs if the additional costs exceed the SRMC (short run marginal cost).”

“The additional costs should allow for the recovery of fixed costs,” it added.

The SRMC refers to variable costs of operating a plant, like fuel.

The proposed resolution currently provides an option to secure additional compensation for plants whose SRMCs are higher than the secondary cap -- which only applies for oil-based plants.

SMC Global said the proposed rule did not include a provision for a recovery filing and the methodology for the determination of additional compensation. It also said there was a need to clarify if the additional compensation covered fixed costs.

“Hydroelectric plants, which have low SRMCs, should also be allowed to claim additional compensation for their high fixed costs which cannot be recovered during periods when a secondary cap is in effect,” the company said.

SMC Global is the independent power producer administrator of three power facilities: the 1,000-megawatt (MW) Sual coal-fired plant and 345-MW San Roque hydroelectric plant, both in Pangasinan, and the 1,200 MW Ilijan natural gas plant in Batangas City.

The San Miguel unit also asked the ERC to explain the basis of the proposed cap and called for a higher price threshold.

While the ERC cited historical data as a basis of the P7.808/kWh threshold, SMC said the computation only considered two trading intervals hitting the P32/kWh cap. It noted that peak prices occur during 11:00 a.m, 2:00 p.m. and 7:00 p.m., and said the price cap should be considered for these trading hours.

Using such, the threshold should be P8.812/kWh, SMC Global said.

The firm also asked the ERC to specify the provisions of the 2001 Electric Power Industry Reform Act that were used as a basis for the proposed resolution. The resolution, it added, should be jointly issued by the ERC, WESM operator Philippine Electricity Market Corp. (PEMC) and the Energy department.

The ERC proposed the temporary secondary cap to protect consumers from supply-related volatility that could lead price spikes in the WESM.

It cited the “protection of public welfare” and “the urgent need to mitigate sustained high prices in the WESM on an interim basis during the months of May and June 2014.”

High WESM prices have been blamed for a P4.15/kWh rate hike that Meralco was supposed to start implementing in stages last December. The increase is currently subject to an indefinite Supreme Court restraining order.

Meralco also sought a P5.33/kWh hike for January but slashed this to P0.45/kWh after PEMC, acting on an ERC order, reduced WESM prices for the December supply month. Regulators have yet to decide on the petition. source

Alsons unit seeks go signal for Zamboanga supply deal

Business World Online
Posted on April 23, 2014 09:20:08 PM

A UNIT of Alsons Consolidated Resources, Inc. (ACR) and a power distributor in Zamboanga have sought regulatory approval for a three-year supply deal, a petition dated March 31 showed.

Mapalad Power Corp. (MPC) and Zamboanga del Norte Electric Cooperative, Inc. (ZANECO) asked the Energy Regulatory Commission to authorize the implementation of their power sales agreement (PSA).

Under the deal, MPC will supply a total of 5 megawatts (MW) to ZANECO through its existing 103-MW diesel plant in Iligan City.

“MPC shall commence supplying power within three weeks from the effective date of the PSA,” the petition read, noting this will run for a period of three years.

The petitioners said that the National Power Corp., through the Power Sector Assets and Liabilities and Management Corp. (PSALM), still supplies bulk of the requirements in Mindanao.

“However, PSALM has drastically reduced its supply commitment to distribution utilities in Mindanao, resulting in power shortages throughout the region,” the petition read.

ZANECO’s supply is insufficient to meet the power needs of its customers as a result of the reduction.

“[T]he franchise area of ZANECO has suffered significant power outages, adversely affecting local businesses and the daily lives of all electricity consumers,” the two parties noted.

ZANECO was compelled to procure additional power supply and other than MPC’s, there was no other viable alternative supply available to address the power shortage.

With the supply coming from MPC, ZANECO’s blended generation rate was expected to reach P4.77 per kilowatt-hour (/kWh) with a one-hour outage per customer.

Without MPC, power interruptions run for three hours, although the generation rate is at a lower P4.40/kWh.

“The immediate implementation of the PSA... will help alleviate the power outages in ZANECO’s franchise area. This will greatly benefit the electricity customers and local businesses,” the petitioners said.

ZANECO distributes electricity in the cities of Dipolog and Dapitan; as well as the municipalities of Godod, Gutalac, J. Dalaman, Katipunan, Kalawit, La Libertad, L. Postigon, Liloy, Labason, Manukan, Mutia, Pinan, Polanco, Rizal, Roxas, Salug S. Osmena, Siayan, Sibutad, Sindangan and Tampilisan -- all in the province of Zamboanga del Norte.

Meanwhile, MPC is a wholly-owned unit of Alsons, which is the listed holding firm of the Alcantara Group.

Alsons shares lost a centavo or 0.61% to end at P1.62 apiece yesterday. -- Claire-Ann Marie C. Feliciano source

SC stops Meralco power rate hike anew

By Vincent Cabreza and Jhoanna Marie Buenaobra and Riza T. Olchondra in Manila
Inquirer Northern Luzon, Philippine Daily Inquirer
7:49 am | Wednesday, April 23rd, 2014

BAGUIO CITY—The Supreme Court, sitting en banc on Tuesday, issued a new temporary restraining order that prevented Manila Electric Co. (Meralco) from collecting increased power charges, h ours before the 60-day TRO that it issued in February lapsed.
Voting 10-4 with one abstention, the high court issued the order although it retained the substance of the previous TRO, said lawyer Theodore Te, spokesperson of the tribunal.
The order prevented Meralco from enforcing a P4.15 per kilowatt-hour (kWh) rate increase in its generation charge that it was supposed to collect by stages starting December last year.
It replaced a 60-day TRO that took effect on Dec. 23 and which was extended in February, Te said.
“Well, it is the same [TRO in substance]… [but] because there was a separate vote, it is not an extension, it is a new TRO… I am told it is of the same tenor,” Te told reporters here.
The TRO effectively orders Meralco to hold off collecting the proposed P3.44 per kWh increase in power generation charges last December, which results in an all-in power rate increase of P4.15 per kWh.
The TRO also enjoins the Energy Regulatory Commission (ERC) against implementing its order last December allowing Meralco to stagger the collection of the proposed increase.
MalacaƱang welcomed the Supreme Court’s decision. “That’s certainly something that we will welcome considering that this is now summertime, and there’s an increased demand in power consumption,” presidential spokesperson Edwin Lacierda told reporters.
“So the extension of the TRO will definitely be something that will be welcomed by our countrymen.”
Chief Justice Maria Lourdes Sereno and Associate Justices Antonio Carpio, Presbitero Velasco, Teresita Leonardo-de Castro, Mariano del Castillo, Martin Villarama Jr., Jose Perez, Jose Mendoza, Bienvenido Reyes and Marvic Leonen voted for a new TRO.
Associate Justices Arturo Brion, Roberto Abad, Diosdado Peralta and Lucas Bersamin dissented.
Associate Justice Estela Perlas-Bernabe inhibited from voting on the consolidated petitions of various groups, among them the Makabayan bloc in Congress led by Bayan Muna Representatives Neri Javier Colmenares and Carlos Isagani Zarate.
The high court is winding up its annual summer sessions in Baguio City this week.

Alleged collusion
The petitioners have asked the high court to stop the rate increase, arguing that high power generation charges that led to the hike resulted from collusion among Meralco, its electricity suppliers and the ERC.
The rate increase stemmed from the shutdown of the Malampaya gas pipeline for maintenance from Nov. 11 to Dec. 10 last year.
A number of power generation plants also shut down during the period, creating a 45-percent shortfall in the average 6,000 megawatts that Meralco supplies to customers.
The shortfall forced Meralco to buy a more expensive supply from the WESM and to pass on the cost to customers.
The shutdown of the pipeline also prompted plants that use the cheaper natural gas from Malampaya and supply power to Meralco to use more expensive fuel.
Meralco merely passes on to its consumers the increased cost of electricity supplied by the generation companies, the Supreme Court said.
So like the previous restraining order, the new TRO stopped these firms from charging high rates for the power they sold to Meralco.
As for power producers and the operator of the Wholesale Electricity Spot Market (WESM), where unusual price surges pushed power rates up, the new TRO said:
“Enjoining the generating companies, specifically Masinloc Power Partners Co. Ltd., c/o AES Philippines, San Miguel Energy Corp., South Premiere Power Corp., First Gas Power Corp. and National Grid Corp. of the Philippines from demanding and collecting the deferred amounts representing the affected costs based on the matters raised in Meralco’s Dec. 5, 2013 letter; and (c) Enjoining Philippine Electricity Market Corp. (PEMC) from demanding and collecting the deferred amounts representing the affected costs based on the matters raised in Meralco’s Dec. 5, 2013 letter.”
Comply with order
Meralco, which is prohibited from collecting any increase in power generation rates in December 2013, as well as regulators said they would observe the status quo.
However, the petitioners against the power hike said the new TRO was only one step in resolving the issue.
All parties expressed hope that the high court would issue a ruling on whether the rate increase should be allowed.
Meralco officials said the country’s largest distribution utility “respects” the order.
William Pamintuan, Meralco head of legal affairs, said via text message that Meralco would “fully comply” with the high court’s TRO.
ERC executive director Francis Saturnino Juan said: “We will still secure a copy of the Supreme Court’s resolution to know if there is anything ERC will have to do pursuant to it and if none, the ERC will just await further orders from the Court. In the meantime, the status quo will be observed.”
Last March, the ERC, under fire from legislators and the public, ordered the recomputation of “unjustifiable” WESM rates that factored into the controversial rate hike last December.
The rate increase for the month in question is thus expected to be much lower than the P3.44 per kWh that was addressed by the TRO.
The new rate is widely expected to be around P0.27 per kWh, although Meralco has not confirmed such figure. With the TRO extended, however, the new WESM rate will not be implemented yet. With reports from Christian V. Esguerra and Leila B. Salaverria source

TRO vs Meralco rate increase extended

By Edu Punay (The Philippine Star) | Updated April 23, 2014 - 12:00am

MANILA, Philippines - The Supreme Court (SC) yesterday extended for the second time the temporary restraining order (TRO) against Manila Electric Co. (Meralco)’s P4.15 per kilowatt-hour rate increase.

In summer session in Baguio City, the justices voted 10-4 to grant the motion of petitioners led by Bayan Muna party-list Reps. Neri Colmenares and Isagani Zarate to extend the TRO that also expired yesterday.

This time, the SC extended the halt order for an indefinite period.

The high court also extended “until further orders” the other TRO enjoining generation companies (Gencos) and power suppliers from demanding and collecting generation charges from Meralco, which the latter failed to pay after the court stopped its P4.15 power hike.

The TRO was first issued by the high court on Dec. 23 last year for an initial period of 60 days and extended for another 60 days last February also upon similar plea of petitioners.

In their urgent motion last week, petitioners argued that not extending the TRO “will leave the petitioners, together with millions of Meralco’s captive market, unprotected, as respondents will be free to charge the consumers with P4.15/kwh rate increase despite prima facie findings of collusion, anti-competitive behavior and abuse of market power prevailing in the market during the period questioned and despite the pendency of these consolidated cases.”

Petitioners reiterated their warning that lifting the TRO would immediately lead to inflation as the rate hike would add billions to production cost of manufacturers, which would push the prices of goods and services up.

They also rebutted the warning of Meralco in oral argument last Feb. 4 of power outages should it fail to collect the generation costs from customers, which it owes respondent Gencos.

The petitioners insisted that Meralco’s warnings of blackouts are baseless, especially since the Department of Energy publicly announced that there is no undersupply of electricity and the supply situation during summer will not result in blackouts.

Gencos, on the other hand, continued to threaten Meralco with very high penalties, interest rates and legal actions for the delay in the payment of the generation costs that the latter has not paid them on the basis of the TRO, they added.

Other petitioners in the case are Gabriela Women’s Party Reps. Luz Ilagan and Emmie de Jesus, ACT Teachers Rep. Antonio Tinio and Kabataan Rep. Terry Ridon.

The first oral argument was held last Jan. 21 with petitioners Bayan Muna party-list and consumer group National Association of Electricity Consumers for Reforms (Nasecore) presenting their case.

The second was held last Feb. 4 with Meralco facing the high court while the third had the Department of Energy and Energy Regulatory Commission (ERC) taking the podium.

The SC has already submitted the case for resolution.

Meralco, the country’s top power distributor, said it respects the order of the SC extending the TRO on its December generation charge hike of P3.44 per kwh and the firm shall fully comply with the ruling, said Meralco first vice president and deputy general counsel and head of legal William Pamintuan.

Energy Secretary Carlos Jericho Petilla expressed hopes that the SC would soon issue a final decision on the matter.

“We respect the decision of the SC but we are also hoping that a final decision will eventually be issued so we can concentrate on moving forward,” Petilla said yesterday.

The SC issued a TRO against Meralco’s December 2013 generation charge, which rose to P9.10 per kwh from only P5.67 per kwh in November.

The generation charge accounts for roughly 65 percent of the total electricity bill. It is the cost of power purchased by Meralco from power generators.

With the extended TRO, Meralco still cannot implement the order of power regulator ERC.

The ERC earlier voided the rates at the Wholesale Electricity Spot Market (WESM), the trading floor for electricity, for the November 2013 and December 2013 supply months, citing market failure and instead ordered market operator Philippine Electricity Market Corp. (PEMC) to issue recalculated rates.

In a press briefing last month, Meralco chief finance officer Betty Siy-Yap said based on the company’s estimates, the generation charge for the month of December will go up by P0.2715 per kwh instead of the original P3.44 per kwh.

This means that generation charge for the December bill will be at P5.9388 per kwh instead of the original P9.10 per kwh.

This developed as Meralco clarified that for its Interruptible Load Program (ILP), typically, a customer consuming 200 kilowatt-hours will pay an extra 52 centavos in the total monthly electricity bill if the ILP is implemented where 10 ILP customers will de-load 10 MW for 10 hours.

Under the ILP, customers with large loads, like commercial establishments, will be asked to operate their own generator sets if the grid operator projects a need to augment generation capacity in the Luzon Grid.

Through this, the aggregate demand for power from the system will be reduced to a more manageable level, helping ensure the availability of supply during the season.



SC order welcomed

MalacaƱang welcomed yesterday the decision of the SC indefinitely extending the TRO on the December 2013 rate hike of Meralco.

While waiting for a final decision on the case, presidential spokesman Edwin Lacierda said an extension of the TRO would “certainly provide comfort to our countrymen especially at this time when there is more consumption demand during summer.”

Earlier, the Palace said it was expecting lower electricity rates with the ERC’s March 3 order stating that prices in the WESM during the period covering the Malampaya shutdown could not qualify as “reasonable, rational and competitive.”

The ERC also made the manifestation to the SC, which issued a TRO against the high power rate hike imposed by Meralco because of the spike in WESM prices.

The ERC ordered the imposition of regulated prices in lieu of the voided rates. This ruling covers Luzon WESM prices and excludes Meralco in view of the SC’s TRO.

Bayan Muna also welcomed yesterday’s SC decision.

“This is indeed a welcome development so that electricity consumers would not have to bear the unjust power rate hike of Meralco. We just hope that the SC will eventually declare the P4.15 rate hike void as well as the subsequent proposed increases connected to the market manipulation and collusion of power industry players,” Colmenares said.

“We also hope that the Supreme Court would finally declare the Electric Power Industry Reform Act (EPIRA) unconstitutional so that this type of unjust rate hikes would not happen again,” he said. – With Iris Gonzales, Aurea Calica, Jess Diaz, Paolo Romero, Artemio Dumlao source

Tuesday, April 22, 2014

Power rate up 46 cents

Sunstar Bacolod
Tuesday, April 22, 2014


THE Central Negros Electric Cooperative Inc. (Ceneco) announced on Monday a 46-centavo increase in its residential rate for April 2014 billing.

This month’s charges will be at P9.9224 per kilowatt hour, up by P0.4596 per kWh from the March rate of P9.4628 per kWh, Ceneco general manager Sulpicio Lagarde Jr. said.

He added that generation charges contributed an increase of 7.29 percent due to Must Run Unit (MRU) and Price Substitution Adjustment (PSA) in the Wholesale Electricity Spot Market (WESM) for the billing months of November and December 2013 as cited in Energy Regulatory Commission Case No. 2014-021 MC.

Also, average transmission rate increased by 9.76 percent. Other factors that contributed to the increase are line rental and systems loss charges.

For April 2014 billing, residential consumers with consumption of 100 kilowatt hours will have an increase charge of P45.96 in their electric bills.

The Ceneco Board and Management reiterated their call to the consumers to conserve energy to avoid paying high electricity bills.

Ceneco’s coverage areas include the cities of Bacolod, Bago, Talisay and Silay, and the municipalities of Murcia and Salvador Benedicto. (NLG) source

Power companies urged to expand capacities

Business Mirror
22 Apr 2014 Written by Lenie Lectura

RISK advisor and insurance broker Jardine Lloyd Thompson (JLT) strongly urged private companies in the power sector to expand their capacities and probably develop more power plants to narrow the gap between demand and supply.

JLT, with Merritt Partners, said it would host a first-of-its-kind energy seminar to highlight common risk issues confronting power-plant developers and operators, and to share best practice solutions.

Dubbed as “Empowering Power Developers,” the seminar will discuss several topics covering issues such as the “bankability” of projects, real-life examples of what can go wrong during power-plant construction and operation, and how these losses can be reduced or avoided via insurance or risk management.

There are more than 100 confirmed attendees from all of the country’s major power developers, investors, finance institutions and law firms.

“JLT is already making a very significant contribution to the Philippine power sector through our insurance and risk management services, but we wanted to make a more general contribution to the power industry as a whole, and after talking to Merritt Partners, we agreed that hosting a free seminar provided the best opportunity to do so,” said JLT Philippines President and Chief Executive Officer Graham Edwards.

JLT works with power-plant developers and financiers in the Philippines and all over the world, bringing energy projects to realization by ensuring project and operational risks are effectively mitigated through a combination of insurance and risk management solutions.

It currently has operational power clients that make up more than 3,770 megawatts (MW) of the on-grid installed capacity in the country and is currently advising and insuring clients in the insurance of eight power projects currently under development.

The keynote speaker is Energy Secretary Jericho Petilla, who gave an update on the power situation in the Philippines. Former Energy Secretary Vince Perez is also part of the program as the moderator for the roundtable discussion on bankability of power plant projects.

“The number of confirmed attendees indicates that the issue of risk mitigation is one of considerable importance to the power sector, and has wider implications for the country’s economic development,” Edwards added.

JLT cited Luzon’s thin power reserve which is meant to cover the projected peak demand plus a certain factor to secure electricity supply in case of an unexpected interruption in the operation of a power plant or a sudden increase in power demand. This situation in Luzon is not much different in the Visayas and Mindanao, it added.

Peak demand in the country grows at an annual average of more than four percent and the development of power plants for additional capacity is not yet keeping pace, JLT noted.

It added that concerns over a consistent and stable power supply are seen as a major barrier to foreign direct investment in the Philippines, especially for the heavily power dependent manufacturing sector which both ADB and the World Bank have identified as the sector that can have the most positive impact on job creation.

JLT stressed that this is a challenge that is not the sole responsibility of the government but needs participation from the private sector as well. source

Environmental groups oppose proposed coal-fired power plants

verafiles.org
APRIL 22, 2014
By PATRICIA ISABEL GLORIA

GROUPS opposed to the building of 25 coal-fired power plants within the next six years gathered outside the gates of the Department of Environment and Natural Resources (DENR) on Tuesday, International Earth Day, as a sign of protest.

Members of the Philippine Movement for Climate Justice (PMCJ) walked from the Bantayog ng mga Bayani along Quezon Avenue in Quezon City and continued with the program in front of the DENR’s main office along Visayas Avenue. An estimated 200 participants joined the rally.

DENR is the agency that issues Environmental Clearance Certificates for the construction of new coal-fired power plants.

Lawyer Aaron Pedrosa, head of PMCJ’s Energy Working Group said this proposal expressly contradicts the United Nation’s Intergovernmental Panel on Climate Chance Fifth Assessment Report (IPCC-AR5).

According to the report, one of the leading causes of climate change is the high concentration of greenhouse gases in the atmosphere. The construction of the 25 proposed coal power plants would increase carbon emissions in the country by 52.82 million metric tons, the report said.

Instead of investing in coal power plants as an energy source, Pedrosa suggested the improvement of sustainable, clean, and renewable options. “We should lead the call for the transition to renewable energy systems,” he added.

Pedrosa added that the people in the communities should be involved in the decision-making, contrary to the corporate-driven Philippine Energy Plan (PEP) implemented today.

“You have a PEP that encourages private sector participation and investment in dirty and harmful energy processes. It is because (private investment) is easier and faster to commission,” Pedrosa said.

However, these plants may be cheaper short-term, but its long-term effects are more devastating, he added.

PMCJ is also lobbying for the improvement of existing renewable energy sources throughout the country, like the Angat Hydropower Plant in Bulacan and the Tongonan Geothermal Powerplant in Leyte.

They also encourage the communities to create off-grid energy sources independent from big energy corporations.

Alyansa Tigil Mina (ATM) national coordinator Jaybee Garganera said the proposed power plants are unnecessary. “Hindi kailangan itong mga proposed na coal plants na ito, kasi hindi supply ang problem natin, kundi distribution (Additional powerplants are not necessary because the problem is not supply, but distribution),” he added.

Garganera said geothermal and hydropower plants are more than enough to supply energy for the country, but the Aquino administration does not appropriate budget for the power plant maintenance.

He added that although it is initially more expensive to maintain these renewable energy sources, in three to five years, the geothermal and hydropower plants will be cheaper to operate than the proposed coal-fired plants.

These coal-fired power plants are also set to be constructed in regions that do not need them, Garganera said. These power plants will provide energy to mining projects and plants, instead of to the communities. “Hindi nagtatayo ng coal plant para sa economic development ng lugar (These coal plants are not for the economic development in the area),” Garganera said.

Ireneo Cerilla, president of Pambansang Kilusan ng mga Samahang Magsasaka (PAKISAMA) said communities in Semirara Island in Antique are in danger of being displaced because of the expansion of a mining plant owned by Semirara Mining Corp.

The mine has already affected the quality of the seaweed in the island, which is the main livelihood of the residents. The seaweed is deformed, and less fish is harvested due to the pollution caused by the mine.

Most of the mass action participants were members of the youth from the alliance. PMCJ Campainger Val de Guzman said these events are for the future of the youth. “We are doing it not for today, but for the future generation,” de Guzman said.

PMCJ is an alliance composed of different sectoral organizations that include SANLAKAS, Kongreso ng Pagkakaisa ng Maralitang Lungsod, Kilusan sa Pambansang Demokrasya, Freedom from Debt Coalition, ATM, Alliance of Progressive Labor and PAKISAMA. source

(The author is a University of the Philippines student writing for VERA Files as part of her internship.)

Tagged Earth Day, PAKISAMA

Power rate hike TRO indefinitely extended

Business World Online
Posted on April 22, 2014 10:26:44 PM
By Claire-Ann C. Feliciano, Senior Reporter

THE SUPREME COURT yesterday issued a fresh restraining order against the controversial Manila Electric Co. (Meralco) power rate hike, indefinitely halting the implementation of adjustments supposed to have taken effect last December.

In a 10-4 vote, justices meeting in Baguio City “issued a TRO (temporary restraining order) effective immediately until further orders,” spokesperson Theodore O. Te told reporters in a briefing.

The high court has yet to rule on a P4.15 per-kilowatt-hour (kWh) increase that Meralco wanted to implement in stages starting last December.

A 60-day TRO was initially issued that month following a lawsuit filed by party-list legislators and consumer groups. The court following this up in February with another stay order that expired yesterday.

Generating companies, National Grid Corporation of the Philippines (NGCP) and Wholesale Electricity Spot Market (WESM) operator Philippine Electricity Market Corp. (PEMC) continued to be prevented “from demanding and collecting the deferred amounts [from Meralco].”

The other firms were identified as Masinloc Power Partners Company, Ltd. through AES Philippines, San Miguel Energy Corp., South Premiere Power Corp. and First Gas Power Corp.

Meralco, for its part, said the company would comply with the high court’s directive.

“We respect the order ... and will continue to await its decision on the case,” said Larry S. Fernandez, Meralco senior assistant vice-president and utility economics head.

The indefinite halt to the power rate hike, he said, would not affect Meralco’s bottom line.

“The matter involves generation costs, which distribution utilities like Meralco are mandated to pass through and reflect in consumers’ billings in accordance with relevant rules. Pass-through charges have no direct impact on earnings and income of distribution utilities,” he said.

PEMC, NGCP, and First Gas parent firm First Gen Corp. also said they would comply.

“NGCP will surely abide by laws and rules governing its operations,” the grid operator said in a statement.

While PEMC acknowledged that the extension of the TRO could affect the finances of some generating companies, President Melinda L. Ocampo said they would nonetheless “comply because that’s an order from the high court.”

Energy Secretary Carlos Jericho L. Petilla, for his part, said: “We respect the decision of the Supreme Court but we are also hoping that a decision will eventually be issued so that we can concentrate on moving forward.”

Palace spokesman Edwin S. Lacierda echoed this, saying: “while we wait for the final decision on the case, an extension of the TRO would certainly provide comfort to our countrymen especially at this time (summer) when there is more consumption.”

Energy Regulatory Commission Executive Director Francis Saturnino C. Juan said the regulator wanted to secure a copy of the order “to know if there is anything the ERC will have to do ... if none, the ERC will just await further orders from the court. In the meantime, the status quo on rates will be observed.”

Ahead of the decision, the ERC has already voided market prices for the November and December supply months and ordered PEMC to adopt regulated rates and rebill Meralco.

High WESM prices were the main reason behind the P4.15/kWh rate hike, plus an even higher P5.33/kWh increase for January, sought by Meralco.

The distribution utility has since cut the proposed January adjustment to P0.45/kWh after PEMC revised WESM prices for the December supply month. Meralco has yet to be billed for electricity contracted in November given the pending Supreme Court case.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by Philippine Long Distance Telephone Co. (PLDT). Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld. source

Power stable after Ilocos Sur quake

Business World Online
Posted on April 22, 2014 10:23:21 PM

THE POWER supply situation in North Luzon remains stable despite the 5.9-magnitude earthquake that hit Ilocos Sur province yesterday morning.
In a statement, the National Grid Corp. of the Philippines (NGCP) said power transmission services remain normal despite the earthquake that occurred some 70 kilometers southwest of Vigan, Ilocos Sur, at 4:45 a.m.

“The grid remained intact as there had been no reported cases of power interruptions and damaged transmission facilities in the North Luzon area,” the company said.

“NGCP, through its Integrated Disaster Action Plan, continuously implements the necessary preparations and precautions to ensure the readiness of all power transmission facilities expected to be affected disasters like earthquakes, typhoons, floods, landslides, tsunami, volcanic eruptions, and fire emergencies,” it added.

NGCP is the private firm that has operated, maintained and developed the country’s transmission network since 2009.

It acquired the 25-year concession of state-owned National Transmission Corp. in an auction conducted by the Power Sector Assets and Liabilities Management Corp. in 2008.

The firm is in charge of the transmission of high-voltage electricity through power superhighways that involve an interconnected system of transmission lines, towers, substations, and related facilities. -- Claire-Ann Marie C. Feliciano source

Monday, April 21, 2014

New plant to boost supply of clean energy

By Daxim L. Lucas
Philippine Daily Inquirer
3:39 am | Monday, April 21st, 2014

President Benigno S. Aquino III . FILE PHOTO BY RYAN LIM/MALACANANG PHOTO BUREAU
The Philippine economy has been growing robustly in recent years mainly as a result of President Aquino’s transparency policies and the flood of cheap funds made available globally by the United States to revive its own economy.
For the Philippines to sustain this upward momentum, however, it has to have a stable supply of electricity, which is critical in attracting fresh local and foreign investment.
To this end, three companies—all leaders in their fields of expertise—have come together to develop a clean energy project that will help ease the country’s tight electricity supply.
From Malampaya platform
First Natgas Power Corp., a subsidiary of the Lopez-owned First Gen Corp., and Siemens broke ground earlier this year for a natural gas-fired, 414-megawatt (MW) power plant beside the Sta. Rita-San Lorenzo natural gas plants in Batangas City.
The P28-billion project—to be built by Sta. Elena Construction and Development Corp.—will be finished in 2016, and will use natural gas from the Malampaya platform and eventually imported liquified natural gas.
The Filipino-German partnership calls for the construction of two more gas-fired plants starting 2017 to bring the total new power output to more than 1,300 MW.
Surplus capacity
President Aquino thanked the consortium during the groundbreaking ceremonies “for their faith in our country and in our economy, which they have expressed not merely in words, but in [actual] investments.”
Mr. Aquino said it was expected that the Luzon grid’s energy demand would rise to about 11,000 MW by 2016 from the present demand of 10,294 MW.
Since power plants take two to three years to build, the government is laying the groundwork now for new plants, he said. The goal, he stressed, “is not simply to meet demand, but to surpass it.”
Mr. Aquino emphasized that demand for natural gas is growing, with its share in the country’s total primary energy supply expected to grow from 8 percent to 14 percent between now and 2030.
Clean energy
Natural gas-powered generators emit only half as much carbon compared to coal-powered plants, resulting in cleaner energy that fulfills the country’s commitment to mitigate the effects of climate change.
Named San Gabriel, the new power plant will also use Siemen’s state-of-the-art sea water cooling structures, designed to provide safe, highly reliable, efficient and low-cost electricity.
Mr. Aquino said that while the plan to guarantee sufficient energy for the country “may just be a single item in the catalog of things to be done in the grand and collective task of nation-building,” projects such as San Gabriel are fitting symbols of the country’s economic success.
Local partner
Siemens and First Gen contracted Sta. Elena Construction and Development Corp. to build the entire power plant, including the cooling towers, citing its expertise and track record in delivering projects despite tight deadlines.
“Sta. Elena’s expertise in delivering major infrastructure projects and their unblemished track record made the consortium confident that we were making the right choice in a local partner who could deliver the project up to specifications and in a timely fashion,” Siemens Philippines president and CEO Jacky Chan said.
The Lopez group currently generates 1,500 MW of electricity from its Sta. Rita and San Lorenzo plants. With the new plant, it will increase its output to more than 2,800 MW.
End to power outages
“Without new power supply, consumers in the Luzon grid will suffer from rotating brownouts and or pay for running more costly and less efficient oil-fired plants,” First Gen president Francis Giles Puno said.
“The shortage will also disrupt the country’s positive growth momentum and hamper the government’s efforts to create more jobs,” he added.
The new plant, which will start commercial operation in 2016, will augment the power supply on the Luzon grid.
First Gen chair Federico Lopez said the San Gabriel plant was the first of three additional power generators planned for the site.
“Our vision is to build an additional 1,342 MW between now and 2019,” he said. “Adding more capacity like San Gabriel will lessen our dependence on expensive oil-fired peaking plants and have the effect of taming opportunistic behavior that can ensue from tight supply conditions.”
Other investors
The rising demand for electricity is drawing other conglomerates to invest in power generation.
Ayala Corp. has said it wants to complete a 405-MW coal-fired power plant in Lanao del Norte by 2018 to help reduce the supply deficit in Mindanao.
The construction of the power plant, whose capacity could be expanded to 540 MW, is expected to start by the second half of this year after the conglomerate completes financial closing and obtains permits.
$1.5M-$2M for 1 MW
As a rule of thumb, it costs anywhere from $1.5 million to $2 million to build one MW of generating capacity, suggesting a total minimum investment of about $600 million for the Ayala group.
The conglomerate has tapped GNPower Ltd. and Quezon Power as partners for the development of the project, located in Kauswagan town in Lanao del Norte province. source

Friday, April 18, 2014

ERC waives requirements for Mindanao power facilities

Manila Bulletin
by Myrna Velasco
April 18, 2014

With Mindanao grid excruciatingly distressed again with summer blackouts, the Energy Regulatory Commission (ERC) has temporarily waived requirements on certificate of compliance (COCs) for power generation firms, including embedded and self-generation facilities (SGF), as the government pleaded to them to offer their capacities for the grid’s use.

In a resolution, the ERC emphasized that the waived COCs will be for a period of 60 days, the anticipated timeframe when these power plants can already secure their respective ‘compliance license’ to operate their assets.

The regulatory body noted that it “allowed operation of said facilities without the corresponding COCs” in keeping with the mandate of the Electric Power Industry Reform Act (EPIRA) on ensuring electricity supply.

“All generation companies, including embedded generators and owners of stand-by generating facilities, which have been directed to operate and which have not been issued their respective COCs, shall apply for the issuance of their respective COC-IPP (independent power producer) within a period of 60 days.”

That timeframe has been anchored on the issued Circular of the Department of Energy (DOE) last month directing “all existing generation companies including embedded generators and owners and operators of standby generating facilities, to make available their generating units to augment the power supply in the Mindanao grid.”

The ERC further qualified that the owners and operators of self-generating facilities already granted with COCs would have to apply “for conversion of their COCs from COC-SGF to COC-IPP” also within the prescribed 60-day timeframe.

The regulator similarly directed that “any generation company, embedded generator and owner of standby generating facility, which fails to file the said application within the 60-day period shall cease from commercially operating its facilities as a power supplier in Mindanao.”

It must be culled that Mindanao power supply had been thrown over the edge because of the ‘repair work’ that must be done at the 210-megawat Steag power facility following the damage it sustained from the February 27 blackouts in the grid.

The energy department and regulators are apparently on panicky mode when it comes to policy enforcements because it is no longer just Mindanao grid this time that is experiencing critical supply, but even the country’s economic hub of Luzon grid.

Next year’s scenarios will be even more forbidding because Visayas grid’s power supply is also seen hitting critical levels. Mindanao, however, may finally get its much-hankered for solution to long-term supply woes with the commercial commissioning of new power plants in the grid. source

Gensets eyed for 2 Surigao tourist sites hit by brownouts

By Roel Catoto on April 18 2014 4:23 pm

GENERAL LUNA, Surigao del Norte (MindaNews/18 April) — Power distributors in Siargao Island and Bucas Grande are planning to purchase modular generator sets to ease the power problem in these two tourism sites, an official said this week.

Sergio C. Dagooc, general manager of Siargao Island Electric Cooperative Inc. (Siarelco) said the two islands have been experiencing two to three hours of rotational brownouts affecting several villages in the islands’ nine municipalities.

Dagooc said Siarelco has a deficit of 1.2 megawatts for its 4-MW requirement.

He added the power utility would need two modular generator sets that can supply at least 2MW.

“This will be used for peak hours to meet the power demand,” he said.

Dagooc said their 23,558 consumers were not as affected as those in other parts of Mindanao since majority of them are residential.

He cited, for example, that rotating brownouts in Surigao City and 11 towns under the Surigao Electric Cooperative reached at four to six hours daily.

He admitted that Siarelco would prioritize tourist areas in the two islands in power distribution.

“We can put the lights out in some villages to make sure these tourist areas which bring economic value to island residents may still have power. But if we will be told by National Grid Power Corporation to curtail our power load, we will do so and this will affect towns,” he said.

“Most tourists would get pissed off when the power is out,” Prudencio Meras, a local surfer said.

Brownouts seldom happen in this town, but some operators of tourism-related businesses were still worried.

“Our gasoline- and diesel-fed generator sets for our resorts are costly to maintain because price of oil products here is so high compared in other cities,” said Andreas Micoleizhik, a German national who owns and manages beach resorts in General Luna.

He said nobody likes to come if the power is unstable.

Rico Rietenbach, also a German national who owns and manages a resort here, said “we are quite lucky we don’t experience brown outs.”

General Luna Mayor Jaime P. Rusillon said most resorts here have standby power generators.

He said tourism drives the economy of the town, second only to agriculture.

The government has allotted P4 billion from the Malampaya Funds for the purchase of modular generator sets by electric cooperatives to ease the power problem in Mindanao.

Dagooc, also the president of Association of Mindanao Rural Electric Cooperatives Inc., said the energy crisis in Mindanao will be solved by 2017 with the operationalization of coal-fired power plants that are now being built in parts of the island. (Roel N. Catoto/MindaNews) source