By
Lenie Lectura - April 14, 2019
LAST week’s widespread
rotational brownouts raised grave concern over the country’s power supply and
reserves, fears of collusion among power producers and doubts on the
capabilities of the government agencies whose mandate, among others, is to
ensure a stable, reliable and affordable energy.
As of April 13, five
power plants, with a combined capacity of 1,437 megawatts (MW), are still out.
But two power plants—Limay
unit 2 of SMC Consolidated Power Corp. (150 MW) and Pagbilao unit 3 of
Pagbilao Energy Corp. (420 MW)—are expected to be back online on April 16.
Another power plant—Sual unit 1 of Team Energy Corp. (67 MW)—is expected to
supply power to the grid on April 18.
Meanwhile, the 150-MW
unit 2 of Southwest Luzon Power Generation Corp. in Calaca is scheduled to
deliver power on April 21. However, the fifth power plant—Limay A1 of Panasia
Energy Inc.—that is still on unscheduled outage has yet to declare when it
would be back online.
The Luzon grid was
placed on red alert notice for three consecutive days last week mainly because
many power plants, mostly very old ones, conked out. An even older plant such
as Malaya unit 1, and SEM-Calaca Power Corp.’s 300-MW unit 2 plant in
Calaca, Batangas, was derated by 150 MW and 100 MW, respectively.
A red alert notice
means the projected demand exceeds available power generating capacity. There
is zero contingency reserve. Normally, the National Grid Corp.
of the Philippines (NGCP) implements Manual Load Dropping (MLD) or rotational
brownout during red alert to maintain the integrity of the power system.
And power outages did
happen.
According
to CitizenWatch Philippines, the issuance of three consecutive red alerts
was more than those issued in previous years. In 2018, the Luzon grid was not
placed under any red alert status while in 2015 and 2017, only one red alert
was announced, said Atty. Hannah Viola, convenor of CitizenWatch Philippines.
Accountability
Viola
said accountability and transparency for power interruptions and outages
should be in force. “This especially holds true on the part of the generation
companies as their generation charges comprise a large chunk of what the
consumers pay for in their electricity bills,” Viola said.
The Electric Power
Industry Reform Act (Epira) dictates the obligation of power producers:
Generation of electric power shall be competitive and open. This provision
means that abuse of market power should be avoided and its anticompetitive
behavior should always be observed.
“This obligation is
underscored now more than ever as electricity rates are set to
increase this month. This price hike is attributable to higher charges
from the Wholesale Electricity Spot Market from the tight supply in the Luzon
grid and the weakening of the peso against US dollar,” Viola pointed out.
Penalty
A Department of Energy
(DOE) official said in an interview that the Energy Regulatory Commission (ERC)
would be in a better position to determine if the power-generation firms whose
power plants went on forced outage last week can be penalized.
DOE Director for
Electric Power Industry Management Bureau Mario Marasigan said the agency
determines the causes of outages and, most important, the expected dates of the
power plants to be online. “ERC can determine which rules have been broken and
corresponding penalties, if there is any, as regulator,” said Marasigan in an
interview.
He also clarified that
the DOE did not directly issue show-cause letters to the power-generation
firms. “Rather, we invited the officials of the power plants—SLGPC, South Luzon
Thermal Energy Corp., Team Energy, Aboitiz Power Renewables Inc. and
Semirara-Calaca Power Corp.,” added Marasigan.
Sought for comment, ERC
Spokesman lawyer Rexie Digal said the regulator has already started its probe
of the power plants concerned. The commission is responsible for validating the
reasons that power firms claim for the outage. However, she could not say when
the agency will be able to conclude the investigation.
“We need to evaluate
the reports that our inspection team will submit to determine whether there
were violations committed. It’s not because they were inspected [that] there
will be findings of violation. Penalties may be fines. As to
timelines on evaluation, it will depend on the findings,” said Digal.
Asked if the ERC has
sanctioned any power firms involved in past incidents of forced plant shutdown,
Digal said, “I can’t remember any recent violation.”
Collusion?
CitizenWatch Philippines
also noted that the cartel-like collusion by power generators should be
thoroughly investigated as historical data indicate a correlation between the
decrease of supply and increase of electricity prices.
“Having a stable supply
of power is a matter that is imbued with public interest and general welfare.
As the confidence of the electricity consumers and the integrity of electricity
market largely depend on the transparency of data, measures should be made to
ensure transparency through an energy platform,” said Viola.
The Senate committee on
energy chaired by Sen. Sherwin Gatchalian intends to ask the DOE and the
Philippine Competition Commission (PCC) to look into possible collusion among
the power producers because of the price spike on the Wholesale Electricity
Spot Market (WESM). “We will ask the DOE and also PCC to look for
possible collusion,” he said earlier.
Spike in WESM rates
In March, when the
Luzon grid was placed on a series of yellow alerts, the Load Weighted Average
Prices (LWAPs) in the spot market reached as high as P12 per kWh,” Meralco
utility economics head Lawrence Fernandez said in an e-mail reply.
Citing WESM data,
Fernandez said the LWAPs for March 4 and 5 were at their highest so far for the
year. “It was P12.698/kWh in March 4 and P11.685 per kWh in March 5,” he said.
In the absence of a
yellow alert, the LWAPs normally reached about P7 per kWh. “In the
immediately preceding week, the highest daily LWAP was only P7.327 per kWh. The
highest daily LWAP was only P7.48 per kWh,” said Fernandez. Meralco partly
sources its power requirements from the WESM. Any adjustment in the cost of
power purchased by Meralco is reflected in the generation component of an
electric bill. Whenever a yellow or alert is issued, this has an impact on
WESM prices.
Separately,
the Independent Electricity Market Operator of the Philippines Inc.
(IEMOP), operator of WESM, cited indications that the secondary price cap
was exceeded at 7.01AM on April 12, when the Luzon grid was placed on red alert
for 13 hours.
However, because
several intervals were affected by “market intervention” and “pricing errors,”
the breaching of the secondary cap is still subject to verification.
‘We are transparent’
The Philippine
Independent Power Producers Association Inc. (Pippa) denied there was collusion
among its members.
“All our member
generators, especially those who are encountering technical difficulties, are
fully transparent and in constant coordination with the lead agencies with the
submission of real-time data and updates in order for these agencies to predict
and come up with an adequate energy supply and reserve,” it said on Sunday.
Power firms with forced
outages are trying to address the problems and are committed to be fully
functional as soon as their issues are resolved in compliance with the
directive and mandate of the DOE, the group added.
“Pippa members are
prepared to answer any and all inquiries as to the status of their plants. In
the meantime, we would like to request for the public’s patience and trust that
these technical difficulties will be fixed in the soonest possible time,” it
said.
AboitizPower Chief
Operating Officer Emmanuel Rubio, in a text message, said on Sunday the power
situation will “ease up” as demand decreases toward Easter Week and a number of
plants on outage are getting back to the grid.
He was referring to
unit 1 of TVI, which was placed on commercial operations last week; GNDP unit
1, which will enter the grid later this year; and Therma Mobile Inc. “A
portion of TMO’s capacity will be available before the end of April and will
remain embedded in the Meralco franchise,” he said.
South Luzon Thermal
Energy Corp. (SLTEC), which restored online its unit 1 on April 13, said it
will take measures to ensure the continued availability of both units 1 and 2
during the critical election period.
“We exerted all our
efforts to ensure that the necessary repairs and other corrective works be
performed quickly and efficiently as possible so we can bring back unit 1
online,” said SLTEC President Vergilio Francisco.
‘Fake news’
The Senate Energy panel
will investigate the unexpected brownouts given that the DOE had given
assurances of ample supply of electricity reserve throughout the dry season.
Gatchalian noted the
DOE’s inaccurate electricity forecast throughout the summer season, noting that
it does not include unplanned outages. He said the forecast includes the
committed capacities in their available capacity, thus making the projection
less realistic.
Comparing DOE forecast
with the NGCP projections, Gatchalian said the projected available capacity of
DOE is way above the level of the projected capacity of the NGCP.
To illustrate,
Gatchalian pointed out that on April 11, the DOE forecast at least 1,085-MW
gross reserve, indicating enough supply of electricity for Luzon. In contrast,
the NGCP forecast showed that the gross reserve for April 11 was only 236 MW.
This, according to the lawmaker, was thin and below the required regulating
reserve.
Moreover, on April 12,
Gatchalian said DOE gave a forecast that there was still 1,006-MW gross reserve
that was enough to power the Luzon grid. However, the NGCP sounded the alarm
bells and issued a red alert status after it forecast a gross reserve of only
21 MW for the same day, lower and way below the sum of the required regulating
reserve.
“Our power consumers
deserve nothing but accurate information. Ang
DOE ang pangunahing ahensya na
dapat nagbibigay ng wasto at sapat na inpormasyon upang makapaghanda ang ating
mga kababayan. Kaso mukhang na fake news tayo ng DOE sa pagkakataon na ito [The
DOE is the prime agency that should give accurate and enough information so the
public is ready for outages. But it seems we were the victims of ‘fake news’ by
DOE in this case],” he said.
CitizenWatch
Philippines said that, while DOE’s efforts to provide up-to-date online
information on the supply situation are commendable, its pronouncements may not
truly reflect the current situation as power interruptions hit Luzon. “What is
actually alarming is the disconnect about what is being publicly disclosed and
what is really happening,” the group said.
‘Heads must roll’
At least seven
provinces along with 40 cities and towns have so far been affected by the
rotating brownouts last week due to the forced and unplanned outages of five
generators in Luzon.
“The brownouts felt by
our constituents in Luzon these past few days is totally unacceptable.
Definitely, heads must roll this time. We owe it to the power consumers to give
them accurate information on the power situation in the country. It seems the
DOE overestimated the available capacity of our power,” said Gatchalian in a
mix of English and Filipino.
He noted how the DOE
even gave assurances before the start of summer that there will be enough power
supply in the country. “If there’s enough power supply, then how come there are
towns and provinces in Luzon that are experiencing rotational brownouts,” the
senator wondered aloud.
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