Mindanao plants need to produce power

Business Mirror //Written by Lenie Lectura / Reporter

SUNDAY, 03 OCTOBER 2010 10:13

THE National Grid Corp. of the Philippines (NGCP) on Sunday urged power producers to make electricity they produce available as base-load supply in a bid to address the power-supply problem in Mindanao. Base-load plants are the production facilities primarily used to meet some or all of a given region’s continuous energy demand and produce energy at a constant rate, usually at a low cost relative to other production facilities available to the system. Examples of base-load plants using nonrenewable fuels are nuclear- and coal-fired power facilities.  NGCP spokesman Cynthia Perez Alabanza said over the weekend the combined output of Mindanao power producers is just barely enough to meet the island’s present requirements, but there is an artificial shortage at present because some of these generators or producers sell their output to the NGCP as ancillary services, which fetch higher rates, instead of selling the energy as generation capacity. Alabanza said  even Energy Secretary Jose Rene Almendras also stressed the need for base-load generation as soon as possible. Power producers must enter into supply contracts with the distribution utilities in their localities so NGCP could dispatch such power as base-load supply for use by Mindanao consumers. The NGCP contracts the use of power barges of the Aboitiz-led Therma Marine Inc. (TMI) for the provision of ancillary services only, not for the supply of power for the consumption of end-users. Alabanza said the NGCP is not allowed by law to contract with power generators for the supply to end-users. Some interest groups familiar with the Mindanao power problem have called on NGCP to dispatch TMI’s power barges to make up for the lack of base-load supply in the grid. Alabanza said the NGCP is bound by the provision of the Ancillary Service Procurement Agreement with TMI, as approved by the Energy Regulatory Commission. Unless revoked or canceled, NGCP will dispatch these power barges as “dispatchable reserve” type of ancillary services only, not as base-load supply. According to Alabanza, the NGCP does not profit from the current setup because it passes on to user-distributors the same price it pays power producers whose output are used for ancillary services.   The NGCP actually absorbs losses from such transactions, she said, “because it pays the producers the full amount billed even if it does not collect the full amount from the users. We have been having a hard time collecting from some users of ancillary services in Mindanao.” Also, the cost of power from base-load supply for consumers is computed per kilowatt-hour, which means based on actual consumption. Power not used by consumers, therefore, does not earn revenue for NGCP because it cannot be stored. Power supplied for ancillary services is computed per kilowatt-month and is pegged at the highest peak use for that particular month, which explains the much higher rate. Ancillary services refer to power supplier-driven services that are necessary to support the transmission of electricity from power resources to load customers to maintain the stability, reliability and quality of power services.