Business World Online
Posted on 10:38 PM, December 14, 2010
ILOILO/CEBU -- Distribution utilities and electric cooperatives in Western Visayas have submitted a resolution to the Department of Energy and the Philippine Electricity Market Corp. (PEMC) seeking further deferment of the activation of the electricity spot market in the Visayas to March 2011, when power supply should be more stable.
Visayas cooperatives, worried that power prices would shoot up because of the persistent shortage in the area, reiterated their call for postponement just before the Wholesale Electricity Spot Market (WESM) in the Visayas was to have a "soft launch" in Bacolod City last night. WESM, which allows trading of electricity as a commodity, is scheduled to start full-blown commercial operation in the Visayas on Dec. 26.
Officials of spot market operator PEMC could not be reached for comment, but it was learned that the National Electrification Administration was in talks with representatives of the cooperatives on this matter.
PEMC data showed that 13 generators and 23 customers -- three distribution utilities, 15 electric cooperatives, two direct customers and three ecozone utilities -- have registered with WESM-Visayas. The Visayas market was supposed to start two years after the start of commercial operations in Luzon in 2006, but this was postponed due to the Visayas’ acute power shortage.
Jose Redmond Eric S. Roquios, Iloilo Electric Cooperative (Ileco) 2 general manager, said the gap between power supply and demand in the Visayas would expose cooperatives to high electricity rates if they source much of their demand from the spot market "which is more likely to become a sellers’ market." "We have not secured our non-firm bilateral contracts for our peak demand. In a situation where supply is still tight, we are at the mercy of the sellers. We could be exposed to high prices in the next three months. It would be better if baseload sources of electricity are on line when WESM operates," Mr. Roquios explained.
In Cebu, the Visayan Electric Co., Inc. (VECO) asked the National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management Corp. (PSALM) to reconsider the reduction in its supply under a new contract to protect the utility and its over 300,000 customers in Metro Cebu from the anticipated high prices in the spot market.
VECO’s supply contract with Napocor and PSALM will expire this Dec. 25. In a letter to VECO President Dennis A. Garcia last week, the state-owned power firm agreed to extend the contract but cut VECO’s allocation to just 75 megawatts (MW) from the current 240 MW. This will bring VECO’s baseload supply to less than 200 MW, including the 105 MW from Cebu Energy Development Corp. and Toledo Power Corp., and has raised the specter of another massive power shortage in Metro Cebu next year. VECO’s daily peak requirement is 380 MW.
"The possibility of massive power shortages in 2011 of up to 100 MW within VECO’s franchise area cannot be discounted. This will result in more frequent, longer rotating outages," VECO warned in a statement.
The utility also sources up to 60 MW of higher-priced electricity from the Cebu Private Power Corp. and 15 MW from Cemex Philippines, but only during peak periods.
Ethel T. Natera, VECO corporate communications manager, said VECO was also committed to source 10% of its requirements from the spot market, as mandated by law.
But the utility, which is Napocor’s biggest customer in the Visayas, is asking that the supply from the former and PSALM be increased to at least 155 MW under the extended contract, in anticipation of the WESM’s commercial operations. "VECO absorbs no less than 60% of NPC’s [Napocor] shortage. We believe that a fair proportionate allocation of the NPC capacity available for contract extension for VECO should be no less than 60% also," VECO said.
Cebu, the biggest power user in the Visayas, continues to suffer from rotating outages despite the completion of two of the three 82-MW coal-fired units of Cebu Energy Development Corp. in Toledo City. Ms. Natera said the shortage in Metro Cebu alone was projected to reach 200 MW yesterday afternoon, double the shortage on Monday. Data from the National Grid Corporation of the Philippines showed that the Visayas yesterday lacked 181 MW with available capacity of 1,175 MW against a peak load of 1,356 MW.
Ileco 1 General Manager Wilfred L. Billena said the Visayas would be ready for WESM after March 26, 2011, when additional capacities will have gone on line. These include the 164-MW coal-fired power plant of Panay Energy Development Corp. in Iloilo City and the 200-MW coal plant of Kepco-Salcon Power Corp. in Cebu.
"Terrain is a challenge in transmitting power from one island to another, particularly that the transmission line between Panay and Negros has a capacity of 85 MW only," he said. "What if we buy 200 MW from Leyte; how will it reach Panay with that kind of transmission line? This has to be addressed before we launch the spot market." -- Francis Allan L. Angelo and Marites S. Villamor
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