Napocor asks regulator for additional rate hike to cover off-grid subsidy

Business World Online

Posted on August 31, 2011 10:25:40 PM

NATIONAL POWER Corp. (Napocor) has asked the Energy Regulatory Commission (ERC) for an additional increase in the universal charge for "missionary electrification" (UCME) totaling P0.0693 per kilowatt-hour (kWh) -- equivalent to P4.3 billion -- on top of the P0.0709/kWh provisionally granted last Aug. 1, "to prevent the shortage of fuel and consequent shutdown of power plants" in areas outside the main grid.

In its filing with ERC, dated Aug. 15, Napocor also asked ERC to provide a return-on-rate base that will enable its Small Power Utilities Group (SPUG) to guarantee continuous service in off-grid areas.

ERC provisionally approved last Aug. 1 a P0.0709/kWh UCME for Napocor to recover about P4.15 billion -- or about P359 million a month -- in various operation costs. That amount, to be reflected in the bills of consumers in the main grid starting this month, adds to the P0.0454/kWh consumers have already been paying in UCME.

Napocor, which had originally sought a P0.2759/kWh increase in this UCME, argued that the additional charge provisionally approved last Aug. 1 covered only about 34% of costs for fuel price fluctuations in 2006-2009.

"While the provisional authority alleviated, to some extent, financial woes…the petitioner respectfully manifests that the additional P359 million a month cannot support continuing operation in off-grid areas," the petition read.

Napocor said it "still requires" projected additional funds totaling P1.609 billion a month, or some P6.346 billion until the end of this year alone, "in order to sustain its operations" in off-grid areas.

Napocor said that, "to date," SPUG now has outstanding payable to fuel and other suppliers totaling P360 million and P11.6 million, net of value-added tax and income tax withheld, respectively.

Napocor’s capability to pay for its costs was dealt a blow when the Justice department, in an opinion it issued on Aug. 17 last year, barred it from issuing bonds or incurring loans to fund off-grid power generation projects or to pay for its debts. Hence, Napocor said, it could "no longer guarantee settlement on due date" of P3.164 billion in promissory notes from the Land Bank of the Philippines maturing on Aug. 31, Sept. 30 and Oct. 31 this year.

It noted that "SPUG’s fuel and other suppliers are becoming hesitant in participating and submitting bids due to uncertainty of…payment."

It added that surcharges and interest charges on its delayed payments to fuel and other suppliers have been "contributing to the increase of its unrecoverable expenses."

In the same petition, Napocor also asked ERC to provide sufficient return-on-rate base (RORB) to provide at least two months worth of cash working capital. It noted that Republic Act No. 7648, or the Electric Power Crisis Act of 1993, had allowed for even a 12% RORB. "Without reasonable RORB…SPUG’s financial capability of sustaining its operation will be drastically impaired." -- ENJD

Napocor asks ERC for another rate hike

By: Amy R. Remo
Philippine Daily Inquirer
9:45 pm | Wednesday, August 31st, 2011
State-run National Power Corp. (Napocor) has sought for an additional P4.3 billion in fees to enable its small power utilities group (SPUG) to continue operations, as well as prevent fuel shortages and the consequent shutdown of power facilities in off-grid, missionary areas.
This means, however, that Napocor will have to collect an additional 6.93 centavos per kilowatt-hour under the universal charge for missionary electrification (UCME), which is being imposed on all electricity users.
If the Napocor petition will be approved by the Energy Regulatory Commission, the resulting UCME will increase to 18.56 centavos per kWh from the current 11.63 per kWh.
It was only last month that the ERC issued the provisional authority that allowed Napocor to collect an additional UCME of 7.09 centavos per kWh, equivalent to P4.15 billion in additional funds for the SPUG operations.
“The provisionally approved amount authorizes Napocor-SPUG to recover the UCME charge starting August 2011 billing period, which will generate an estimated additional cash of P359 million per month or P1.436 billion starting September until end of 2011,” Napocor said in its application filed last August 18.

Power consumers brace for another rate increase

business mirror

WEDNESDAY, 31 AUGUST 2011 20:48 PAUL ANTHONY A. ISLA / REPORTER

POWER consumers may have to shell out more in settling their monthly electricity consumption bill following the filing of yet another rate-adjustment petition by the National Power Corp.-Small Power Utilities Group (Napocor-Spug) with the Energy Regulatory Commission (ERC).

In its petition, Napocor-Spug sought an additional adjustment of at least 6.93 centavo per kilowatt-hour (kWh). The additional cost will enable Napocor-Spug to continue its operations in remote areas, assure continuous fuel shortage supply and avoid possible shutdown of power plants.

The Napocor-Spug has been recently granted by the ERC a provisional authority to collect an additional 7.09 centavo per kWh from consumers through the universal charge for missionary electrification (UCME).

To date, Napocor-Spug collects 11.63 centavo per kWh from consumers through the UCME. It also asked the ERC for the approval of the return-on-rate base (RORB) to allow it to guarantee continuous operation in remote areas.

The Napocor-Spug said the provisional authority did not provide for the 12 percent RORB that would allow for at least two months cash working capital for “unrecovered” operating expenses and for capitalized maintenance expenses of generating plants.

The Napocor-Spug justified that its financial capability of sustaining its operations will be drastically impaired without a reasonable RORB.  Napocor-Spug added it paid new power providers (NPP) with a total subsidy amounting to P693.6 million last year that resulted in a deficit of P334.6 million from the approved amount of P310 million for the same year. 

From January to July this year, Napocor-Spug said its actual payment of NPP subsidy that includes claims for prior years’ adjustment amount to P498 million, while the approved UCME subsidy to NPP for 2010 to 2013 is only P310 million per year.

The Napocor-Spug said it still has additional projected requirements up to year-end of about P527 million based on the ERC-approved true cost generation rate and projected energy sales for NPPs. 

It noted that its total cash deficit that will be attributed by the full payment of subsidy to NPP will account to about P715 million.  While the provisional authority alleviated to some extent its financial woes, Napocor-Spug said the additional revenues of P359 million a month cannot support the continuing operations in remote areas.
The 7.09-centavos per kilowatt-hour provisional authority, according to Napocor-Spug, is only about 24 percent of the total applied UCME adjustment of P17.1 billion or about 30 percent of the total deferred accounting adjustments for the generation rate adjustment mechanism  and Incremental Currency Exchange Rate Adjustment (Icera) of P14.1 billion applied with the ERC. 

On May 19, 2011, Napocor filed a petition for a 27.95-centavo per kilowatt-hour adjustment to the UCME to recover the shortfall in revenues resulting from higher fuel costs and foreign exchange fluctuations, adjustments in the true-cost of generation of new power provider, and a 12-percent RORB o cover its working capital from 2003 to 2009.

Meralco to pursue remaining capex

Manila Times.net
Written by : EUAN PAULO C. AÑONUEVO


MANILA Electric Co. will continue with its capital-spending program even after regulators approved a lower budget.

Oscar Reyes, Meralco chief operating officer, said the company will spend P4.5 billion to finance remaining projects for the year.

“The amount is for substations, transformers and other capital expenditures aimed at essentially further enhancing reliability and quality of service and also make our system more robust to provide 24/7 service,” he said.

For the full year, the country’s largest power distribution utility allocated an P8.5-billion budget.

The company, however, initially sought a P10.9-billion capital spending requirement but the Energy Regulatory Commission (ERC) slashed the amount.

Because of this, Meralco would have to prioritize capital projects “that will enhance the quality of service to our customers.”

Meralco’s capital budget is usually spent on electric capital projects such as construction of new distribution lines, replacement of defective power transformers, construction of substations, among others.

The ERC earlier reduced Meralco’s maximum average price from P1.65 per kilowatt-hour to P1.58 per kilowatt-hour, translating to different electricity rates for the latter’s customer classes within the second half of the year.

The reduction in Meralco’s distribution rate, or the line item in power bills that goes directly to the utility’s pockets, came about after the ERC disallowed certain projects in the company’s proposed capital expenditures.

Meralco applied for a slightly higher maximum average price of P1.60 per kilowatt-hour to take into account its performance last year, which it said surpassed indicators set by regulators for various operations and service areas.

Under the performance based regulation rate setting scheme prescribed by the ERC, Meralco is qualified for incentives should its performance surpass standards set by the regulator.

Meralco has around 4.9 million customers in its franchise area, which covers Metro Manila and its environs. The utility is controlled by the PLDT Group.

PNOC unit seeks partners for 11 hydropower projs

By Ted P. Torres (The Philippine Star) Updated August 31, 2011 12:00 AM


MANILA, Philippines - PNOC Renewables Corp. is looking for potential partners for 11 hydropower projects estimated to generate up to 276 megawatts (MW) and investments of about $489 million (roughly P21 billion).


The renewable energy arm of state-owned Philippine National Oil Co. (PNOC), PNOC renewables was formed to handle the government’s renewable energy projects including hydro, geothermal, wind and solar energy projects.


However, PNOC Renewables admitted the hydro projects are still on the development stage and that feasibility studies will be completed by the end of the year. Majority of the projects are located in frontier areas.


“We will be looking for potential partners and encourage private investment,” Roger Buendia, PNOC Renewables president, said.


The hydro projects are: Jalaur in Iloilo (up to 20 MW); Pacuan-Ginoobaan in La Libertad, Negros Oriental (33 MW); Okoy in Valencia, Negros Oriental (11 MW); Siaton in Negros Oriental (5.4 MW);Dalangan in Oriental Mindoro (18 MW); Sicopong in Negros Occidental (17.8 MW); Nalatang B Kabayan in Benguet (45 MW); Abuan in Ilagan, Isabela (60 MW); and Saltan B (24 MW), Pasil B (20 MW) and Pasil C (22 MW), all located in Kalinga.


Among these projects, the Abuan hydropower project is the most expensive to build at $99.46 million. The Abuan hydro is a reservoir-type hydro power development along the Abuan River and will be located in Villa Imelda, Ilagan, Isabela.


The 45-MW Nalatang B run-of-the-river hydropower project is estimated to cost $61 million. It will be located in Kabayan, Benguet.


The $50-million Jalaur project has a potential capacity of 20 MW but PNOC Renewables is developing an initial 11 MW, which is expected to greatly benefit Visayas electricity consumers.


The Sicopong hydro project, estimated to cost $45 million, is a run-of-the-river type using the potential of the Sicopong River for power generation.


The $46.57-million Pacuan Guinobaan hydro project, meanwhile, is a pump-assisted hydropower development along the Pacuan and Guinobaan Rivers.


PNOC Renewables is also developing the Saltan B hydropower project in Salegseg, Balbalan, Kalinga. The proposed project is estimated to cost $30.9 million.


It is also pushing for the development of the Pasil B and C hydro projects located in Lubuagan, Kalinga. Both projects are run-of-river type hydro project utilizing water from the Pasil River. Pasil B and Pasil C hydro projects will cost $27.5 million and $32.1 million to build, respectively.


PNOC Renewables will also move forward with the 18-MW Dulangan hydro project located at Baco, Oriental, Mindoro, which will cost $34.8 million to construct. The Okoy hydro project, on the other hand, is estimated to cost $14.13 million. The Siaton hydropower project is a run-of-the-river type project costing $16.67 million.

Meralco to spend P4.5 B on transformers, substations

By Ted P. Torres (The Philippine Star) Updated August 31, 2011 12:00 AM


MANILA, Philippines - The Manila Electric Co. (Meralco) will spend P4.5 billion for the purchase of transformers and construction of substations as part of the company’s projects for the year.


For the whole of 2011, Meralco allocated P8.5 billion for capital expenditures with some P4 billion already utilized.


According to Meralco chief operating officer Oscar Reyes, the proposed budget is for substations, transformers and other expenditures to enhance reliability and quality of services.


Meralco’s capital budget is usually spent for electric capital projects such as construction of new distribution lines, replacement of defective power transformers, among others.


It was prepared to spend up to P10.9 billion but the Energy Regulatory Commission (ERC) approved a lower capex figure.


Reyes said despite the lower capex, Meralco would continue to provide reliable and uninterrupted service to its customers.


“We will prioritize capital projects that are for distribution service, that will enhance the quality of service to our customers,” he added.


Meralco expects core net income for the full year to reach P14 billion, or 15 percent higher than the previous year. Its first half core net income went up 35 percent to P7.8 billion from P5.8 billion in the same period last year.


Meralco president and chief executive officer Manuel V. Pangilinan had earlier said that electricity sales in the second half will be broadly similar to that realized in the first half.


“And reflecting slightly lower distribution tariffs for this period as a consequence of the third Regulatory Period, we are guiding our core net income for the full year 2011 at P14 billion,” Pangilinan said.


Consolidated revenues, of which electricity accounted for 97 percent, declined two percent to P124.8 billion in 2011 relative to the same period in 2010.


Meralco, now controlled by PLDT Group, San Miguel Corp., and First Philippine Holdings Corp., has around 4.9 million customers in its franchise area.

Power plant buyer slams price ceilings

Business World Online

Posted on August 30, 2011 10:12:30 PM

THE FOREIGN investor behind a coal-fired power plant in Zambales has reportedly complained that competing against state-owned firms with “artificially low” rates were scaring off firms from entering the industry, a diplomatic cable released by WikiLeaks last week showed.

AES Corp., which now operates the 660-megawatt Masinloc plant after buying it from the government in 2008, was concerned that regulators’ low price ceilings “have eliminated profit margins,” stated cables purported to have been sent out by the United States embassy in July that year.

Back then, National Power Corp. (Napocor) had not yet filed a petition for higher rates to reflect coal price hikes, AES officials were said to have claimed.

“It is impossible for AES and other independent power producers to recover their fixed costs and make debt repayments,” read the cable with the heading “Buyer’s Remorse?”

“AES warned of a chilling effect on energy sector investments that will create eventual electricity shortages,” it read further, noting that there is a mandated lag before power plant buyers are allowed to increase power prices.

Officials from AES and the US embassy could not be immediately reached for comment.

Currently, Napocor’s average effective rate in Luzon is blended with those of independent power producers (IPPA) to create the generation charge which is passed on by distribution utilities to consumers. Many government generating assets in Luzon have already been privatized since 2008.

Sought for comment, Energy Secretary Jose Rene D. Almendras denied that the government had been keeping prices low, noting that state players had been regularly filing for rate hikes. -- ENJD

Meralco allots P4.5B for rest of 2011 projects

business mirror

TUESDAY, 30 AUGUST 2011 21:36 PAUL ANTHONY A. ISLA / REPORTER

POWER retailer Manila Electric Co. (Meralco) has programmed P4.5 billion to fund its remaining projects for the year.

The projects are targeted to increase their system’s efficiency and reliability, Oscar Reyes, Meralco senior executive vice president and chief operating officer, told reporters.

Meralco has already spent P4 billion of the allocated P8.5-billion budget for capital projects this year, he said.

The remaining budget, according to Reyes, will be spent for substations, transformers and other capital expenditures to improve reliability and quality of service and to make the system more robust to provide 24/7 service.

Reyes said Meralco is prepared to spend P10.5 billion to P10.9 billion, but regulators approved a lower capital spending.

Despite the lower capital expenditures, the company will continue to provide reliable and uninterrupted service to its customers, the Meralco official said.

“We will prioritize capital projects for distribution service that will enhance the quality of service to our customers,” he said.

Meralco earlier said it would continue to maintain its service commitment to its customers even after the Energy Regulatory Commission (ERC) slashed its average distribution charge for the regulatory year 2012 to 2015.

The ERC approved a P37.2-billion capital- expenditure program for Meralco for thethird regulatory period from July 2011 to June 2015.

In the first half of the year, Betty Siy-Yap, Meralco senior vice president and chief finance officer, said the company’s consolidated net income increased by 25.6 percent to P6.091 billion from P4.851 billion during the same period last year.

Meralco’s core net income also increased by 34.7 percent to P7.822 billion in the first half of the year from P5.805 billion in the same period last year.

The increase in income was driven by adjusted distribution rate due to the implementation of the tariff adjustment for the fourth regulatory year of the second regulatory period; higher volume sold to commercial customers; and lower operating costs, Yap said.

However, consolidated sales revenues dropped by 1.9 percent to P124.8 billion in the first half of the year, as electricity sales revenues also decreased by 2.6 percent to P121.2 billion in the first half. In the first half of 2010, Meralco’s consolidated sales revenue was P127.2 billion that took into account P124.4 billion in electricity sales revenues.

Yap said nonelectricity sales revenues, on the other hand, increased by 30.9 percent to P3.6 billion in the first half of the year from P2.8 billion in the same period last year.

In terms of gigawatt-hours (GWh), Meralco sold a total of 14,781 GWh of electricity in the first half of the year, or 1.1 percent lower than the sales volume of 14.950 GWh in the same period of 2010.

First Pacific considering gold, coal assets in Indonesia

BUSINESS MIRROR
TUESDAY, 30 AUGUST 2011 17:42  
MIGUEL R. CAMUS / REPORTER   
CONGLOMERATE First Pacific Co. Ltd. is looking to acquire gold and coal assets in Indonesia, managing director and chief executive officer Manuel V. Pangilinan said last week.


The move comes more than a year after First Pacific effectively gained control of Philex Mining Corp., the Philippines’ biggest gold producer. If successful, it could also be First Pacific’s next major acquisition outside the Philippines.


The company, controlled by Indonesian billionaire Anthoni Salim, is already the single-biggest shareholder of telecommunications giant Philippine Long Distance Telephone Co. (PLDT).


First Pacific also owns a near-majority stake in the country’s largest electricity retailer Manila Electric Co., which is putting up a 1,500-megawatt power generation portfolio that will include coal-powered facilities through 2016.


“We are looking [at mining acquisitions] in Indonesia,” Pangilinan told reporters in a chance interview last week. He said his group is looking at “both” coal and gold prospects, without providing additional details.


Indonesia is ranked the seventh-largest gold producer in the world in a list led by China, Bloomberg data last year showed. In terms of coal, that country is the world’s second-biggest exporter, second to Australia.


Market watchers noted that Pangilinan is diversifying his options in terms of mining acquisitions. While the Philippine mining sector remains largely underdeveloped and offers vast potential, particularly for gold, his group has been unsuccessful in making any large acquisition after Philex, market watchers said.


Since Pangilinan took the helm at Philex, investments through that company have included a 5-percent stake in Lepanto Consolidated Mining Co. and a joint-venture agreement to develop and operate a mining property owned by Manila Mining Corp. Both Lepanto and Manila Mining are controlled by businessman Felipe Yap.


Pangilinan has indicated that he is “ready” to increase Philex’s stake in Lepanto should an opportunity present itself.


Market watchers are also wary on how First Pacific’s plans could clash with those of perceived corporate rival San Miguel Corp. (SMC), which is also eyeing “bigger” acquisitions in Indonesia and Australia, its president Ramon S. Ang said earlier this month.


SMC, a food and drinks company diversifying into power and other infrastructure-related businesses, acquired three companies comprising Exxon Mobil Corp.’s downstream oil business in Malaysia for $610 million two weeks ago.


This would not be time First Pacific has looked toward Indonesia, considered Southeast Asia’s biggest economy, for investments. It already owns PT Indofood Sukses Makmur, a company listed on the Indonesia Stock Exchange.


Apart from PLDT and Philex, the Hong Kong-based conglomerate also owns Philippine-listed Metro Pacific Investments Corp. which has interests in water infrastructure, toll roads, power generation and hospitals.

3,000 residents reject Subic coal-plant project

business mirror

TUESDAY, 30 AUGUST 2011 18:01 HENRY EMPEÑO / CORRESPONDENT

OLONGAPO CITY—In an apparent show of force, residents and officials of Olongapo City and Zambales province braved heavy rains on Monday and showed up for a rally and a protest march here to express their disgust  over the proposed coal-fired thermal power plant project at Subic’s Redondo Peninsula.

Clad mostly in black and green to show their rejection of coal power and their desire for alternative-energy sources, more than 3,000 residents filled the Rizal Triangle covered court as community leaders took turns lambasting the project, which they said will destroy the environment and local tourism, and endanger the health of the local populace.

Representatives from communities at the Subic Bay area also read statements and resolutions signifying their opposition to the 600-megawatt coal plant, which is set for construction by the Redondo Peninsula Energy Inc., a company formed by Aboitiz Power Corp., Taiwan Cogeneration Corp., and their new partner Manila Electric Co.

The protest, which was spearheaded by the multi-sectoral Olongapo-Zambales Civil Society Network (OZCSN) and the Sigaw ng Lumalabang Olongapeño (Siglo), utilized the modern wonder of social-networking sites to summon participants.

It was also attended by some political leaders, including Olongapo Mayor James Gordon Jr. and members of the Olongapo City council, Zambales First District Rep. Mitos Magsaysay, Akbayan Party-list Rep. Walden Bello, and Zambales Vice Gov. Ramon Lacbain II.

During the rally, speakers stressed the fact that communities around the project site have not signified their acceptance of the project, a prerequisite to the granting of an environmental compliance certificate (ECC) by the Department of Environment and Natural Resources (DENR).

“If Olongapo is anti-coal plant and Zambales is anti-coal plant as we have shown today, who then are the people that the project proponents say have approved the project?” asked Lacbain, himself a resident of Subic town, the proposed project site.

Lacbain said he is challenging the project proponents and the Subic Bay Metropolitan Authority’s Ecology Center to name the individuals and groups who purportedly approved the project.

“If they cannot prove the acceptability of the project, then they should stop forcing the people of Zambales and Olongapo to accept the same,” he said.

Lacbain added that because it was clear that there was no community acceptance, the Zambales provincial government under Gov. Hermogenes Ebdane Jr. has been urging the DENR to recall the ECC for the Subic coal plant.

Gordon said that the strong turnout of residents for the rally has provided the necessary proof to refute claims by proponents that the project has been accepted by the community, as required by law.

“We are all heroes today because we have stood up for the future of our community and our children,” Gordon said. “We want call centers here, not a coal plant. We want wind power, not coal power.”

After hearing the speakers, the protesters then proceeded to march from the Olongapo City Hall to the gates of the Subic Bay Freeport, about 5 kilometers away. But as heavy rains poured again, the group disbanded.

However, organizers said that Monday’s rally was just the start of more protest actions against the proposed coal-fired thermal power plant at Subic’s Redondo Peninsula, which also hosts the facilities of Korean shipbuilder Hanjin Heavy Industries Corp.

According to Alex Hermoso, lead convener of the OZCSN, several protest actions are forthcoming, even as oppositors are beefing up their ranks in anticipation of bigger mobilizations ahead.

Hermoso said that aside from affected communities and local nongovernmental organizations, those who are opposing the project now include tourism-related locators in the Subic Bay area, members of the Subic Bay Freeport Chamber of Commerce and the Greater Subic Bay Tourism Bureau, and residents of the Binictican and Kalayaan housing areas in the Subic free port.

“The fight against the coal-fired plant is just beginning,” Hermoso said. “The proponents and supporters of the coal-fired power plant have seen nothing yet.”

---

In Photo: Protest placards by residents of the Subic Bay area express their rejection of the proposed 600-megawatt coal-power plant, a joint project of the Redondo Peninsula Energy Inc., a company formed by Aboitiz Power Corp., Taiwan Cogeneration Corp., and their new partner Manila Electric Co.  Olongapo residents wore black to show opposition to the coal plant and green to clamor for renewable-energy sources.  Young people joined their elders to show their opposition.  (Henry Empeño)

Energy from Mother Nature

Manila Standard Today

A minor but loud ruckus recently broke out in the local press between my colleagues in the Foundation for Economic Freedom and advocates of so-called renewable energy: that vision of power sources that are both clean and unlimited, somewhat like previous conjurations of cold fusion or, even earlier, perpetual-motion machines.The criticisms from FEF centered on the schedule of feed-in tariffs recently drafted by Department of Energy officials for public discussion. These “reverse tariffs” will be added to consumers’ power bills to subsidize various renewable energy technologies, until they become cheap enough to compete with carbon-based fossil fuels (oil, coal, natural gas). But why the rush? After all, these new technologies will naturally become cheaper over time, with greater usage and continued technical advances. This reawakened interest in renewable energy is another throw-off from the Philippines’ extraordinarily high level of concern for its environment. This concern, fed by the indefatigable gadflies of civil society, has already led to economically objectionable government policies like wide-ranging restrictions on mining, logging, and other forms of exploiting nature for human benefit. The Church has generally supported such restrictions, at times veering perilously close to the pagan heresy of deifying Nature at the expense of the creature who was created in God’s image. On her watch, former President Arroyo famously set aside half a day every week for environmental issues, and committed the country to carbon reduction targets even more aggressive than mandated by global protocols. Since our contribution to the global carbon footprint, however, is in fact disproportionately small for our size and population, critics wondered whether such environmental correctness was worth the price to be paid in potentially slower economic growth. After all, growth will always demand energy—and the faster that growth, the greater the appetite for energy: to power a country’s factories, keep its cars on the roads, and sustain the amenities of modern life to which modern consumers aspire. Thus, among developing countries--where growth is mandatory if populations are to lift themselves from poverty and stay ahead of their own increasing numbers―there has to date been little sympathy for the angst in the developed world over what is seen there as unacceptable environmental costs of growth. * * * One definition of RE talks about the potential sources of energy that are readily found in nature―the sun, the wind, the ocean waves and tides, running water, geothermal reserves―and that are clean and renewable, i.e. either inexhaustible or naturally replenished. This definition generally also includes biomass and biofuel, which unlike the others do add to the carbon footprint, but presumably in amounts that are much less than the burning of fossil fuels. What about nuclear energy? It’s virtually inexhaustible; it does not add to the carbon footprint; and it supplies enough dependable power to serve as the mainstay of baseload (24 x 7) power generation capacity. In fact, I would stand foursquare behind well-known advocates like former Congressman Mark Cojuangco that nuclear energy, by all the traditional standards, has got to be the crown jewel of renewable energy. And it’s something we can put in place during the term of this President: within five to seven years if we start from scratch, three to five years if we retrofit used plants for sale from Korea, two to three years if we simply fire up the Bataan plant. Of course, the real problem with nuclear energy is that it suffers from a bad rep, mostly the product of perennial hype rather than proven hypotheses. It also carries its own unique challenges, such as how to dispose of nuclear waste (spent nuclear fuel and cooling water) and the minimal, though still nonzero, risk of catastrophic damage (the partial meltdown of the Fukushima nuclear power plant in Japan after the recent tsunami). None of these challenges are insurmountable, but the bad rep remains smelly enough for nuclear to be excluded from politically correct discussions of renewable energy. * * * Regardless of the soundness of the economic and financial thinking behind renewable energy, what’s undeniable is the rosiness of its commercial prospects. Over the last five years, the various RE technologies grew capacity by average annual rates of 15 percent to 50 percent, with wind power adding the most capacity and now present in over 80 countries. Solar photovoltaic capacity was added in over 100 countries last year alone. Globally, over 3.5 million direct jobs have been created in RE, half of them in the biofuels sector. As a booming new industry, manufacturing leadership in RE is now shifting from Europe to Asia (China, India, South Korea). One UN agency estimates that the Asia-Pacific will need to invest up to $600 Billion until 2050 in order to reduce greenhouse gases in the region to desired levels. China is expected to account for more than half of this new investment, followed by India with 17percent. Last year, renewable energy investments worldwide reached $211 billion, a third higher than the $160 billion a year before. This excludes some $15 billion in (unreported) investment in solar hot water collectors, plus another $40 billion to $45 billion in large hydropower projects. And for the first time ever, the share of developing countries in RE exceeded that of developed countries in 2010, with China accounting for over a third of total renewable energy investments the second year in a row. This bright future now being predicted for renewable energy in the region is certainly worth taking a closer look at by businessmen and other interested readers. For more detailed analysis of the global picture, technology background, and Philippine situation of renewable energy, you can subscribe to upcoming issues of The Censei Report, our online weekly digest of news analysis. Just email me at my address below. * * * (Email gary.olivar@censeisolutions.com)

Philippine power rates now the highest in Asia

Manila Standard Today

by Maricel Cruz

THE Philippines last year charged the highest electricity rate to residential customers in Asia at 18 US cents a kilowatt-hour, according to a study conducted by the Australia-based International Energy Consultants.

The group reached its conclusion after comparing the power rates charged in Asia in October 2010, when the Philippines beat all the other countries in the region with its charges.

In response, Eastern Samar Rep. Ben Evardone, an administration ally, urged the newly appointed officials of the Energy Regulatory Commission to do something about the high electricity rates here.

“I’m urging the new ERC commissioner to protect the interests of the consumers and not to succumb to the pressures and intense lobby of energy companies which have pending petitions for power rate increases,” said Evardone, chairman of the House information committee.

Based on the study, Evardone says, the Philippines—with its average retail rate of 18.1 US cents a kilowatt hour—eased out Japan as the country with the most expensive electricity in Asia in the same month last year. The rate charged to Japan’s residential consumers in October 2010 was 17.9 US cents a kilowatt hour.

The same study says the Philippines also had the second highest industrial rate in the world at 13 US cents a kilowatt hour, next only to Singapore’s 14 US cents but higher than Japan’s 12 US cents, Thailand’s 9 US cents, Malaysia’s 8 US cents, South Korea’s 7 US cents, Vietnam’s 6 US cents, and Indonesia’s 5 US cents.

“The high cost of electricity in the Philippines was traced by the group to the fact that all costs—from producing power to distribution and taxes—are passed on to consumers,” Evardone said.

He says the Philippines is also the only country in Asia that has privatized its power sector, and the only one offering no subsidies on power rates.

The new officers of the Energy Regulatory Commission must protect consumers, he says.

“They should not be stampeded into approving all the pending petitions for power rate increases,” Evardone said.

“We will be watching them very closely if they are truly for the welfare of the consumers.”

AES planning expansion of 660-MW plant

business mirror

TUESDAY, 30 AUGUST 2011 17:39 PAUL ANTHONY A. ISLA / REPORTER

THE Department of Energy said US-based AES Corp. will push through with its planned expansion of its 660-megawatt coal-fired power plant in Masinloc, Zambales.

Energy Secretary Jose Rene Almendras, however, said although AES has sent word it is pushing through with the expansion, he is not certain if the project will start this year.

AES earlier said it will invest around $800 million to expand the Masinloc facility. President and chief executive Paul Hanrahan even met with President Aquino and Almendras to discuss company plans to double the size of the said power plant.

The Philippine economy continues to show significant levels of growth and requires new low-cost electric generation capacity. “Our Masinloc facility was built in a way that included much of the critical infrastructure for the expansion unit, allowing us to provide one of the lowest cost alternatives for capacity expansion,” Hanrahan said.

In April 2008, AES took over the operations of the power plant from the Power Sector Assets and Liabilities Management Corp. after paying $930 million.

AES then increased the plant capacity to 600 MW from the original 450 MW. It also improved the plant’s environmental performance, lowering emissions levels so that they are in compliance with World Bank standards.

AES said the Masinloc expansion project will leverage the existing infrastructure, transmission interconnection and the company’s operating experience in the Philippines.

ATN Phils Solar Energy to invest P5.68 B in 30-MW power project

By Ma. Elisa P. Osorio (The Philippine Star) Updated August 30, 2011 12:00 AM


MANILA, Philippines - ATN Philippines Solar Energy Group Inc., a joint venture between ATN Holdings Inc. and Transpacific Boardbrand Group International Inc. will be investing P5.676 billion for a 30-megawatt solar power project in Montalban Rodriguez, Rizal.


The project will be able to produce 60 million kilowatthours of clean energy which will be sold for P17.95 per kilowatthour. It would employ a total of 30 personnel when it starts commercial operation in December 2013.


ATN is targeting to serve Metro Manila, particularly the peak demand of malls in the high growth business districts of Quezon City.


It can also sell electricity directly to end users under the Wholesale Electricity Sport Market (WESM) set-up. It may also negotiate with the National Power Corp. as primary off-take customers that will distribute power through the Transeco.


ATN will put the plant in the 324-hectare property of ATN Holdings in Montalban, Rodriguez Rizal, which is less than 10 kilometers away from densely populated business districts in Metro Manila.


The company said that its power supply during the peak hours would contribute in the reduction in capital cost of base load generating plants that use imported coal, and save the country’s foreign exchange capital and operating costs for power generating units.


The Board of Investments (BOI) has given perks to the project because it is under the Mandatory List of the Investment Priorities Plan and is entitled to incentives under the RE. Law or RA 9513. The firm is also registered with the Department of Energy as a new RE developer of solar energy resources.


However, the BOI said that once the feed-in-tariff (FIT) is in place, ATN should no longer be entitled to income tax holiday as the FIT is in itself the guaranteed return.

ERC bares list of large customers who may choose their own power suppliers

By Ted P. Torres (The Philippine Star) Updated August 30, 2011 12:00 AM 


MANILA, Philippines - The Energy Regulatory Commission (ERC) has released a list of “contestable customers” or large electricity consumers who may choose the power plants that would supply their power requirements starting next year.


Around 334 companies in Luzon and Visayas were certified to have met a monthly peak demand of 1.5 megawatts (MW) and up.


On the other hand, 180 establishments were found to have monthly peak demand between one megawatt and 1.49 MW.


The so-called contestable customers are qualified to participate in the open access in the power sector, or customers that can select their power source and probably get better deals since it will be directly dealing with power producers.


Among the companies given the nod by the regulator are water utilities, property developers, financial institutions, local government units, industrial manufacturers, and food and beverage companies, among others.


Open access will allow consumers to choose their power suppliers in contrast to the current practice of distribution utilities sourcing electricity on behalf of their customers. It should spur competition and efficiency in the power generation sector, which was once dominated by the government.


The implementation of the scheme was anchored on the completion of the last remaining mandate under the Electric Power Industry Reform Act of 2001 (EPIRA), that of the privatization of at least 70 percent of government’s power plants and contracted output with independent power producers.


In a recent decision, the ERC confirmed that the government has met the privatization threshold thus scheduled the start of open access on Dec. 26, 2011.


The EPIRA likewise states that the introduction of open access will be gradual, starting first with end-users with a 12-month average demand of at least one-megawatt. The coverage will then be expanded over the succeeding years until it reaches the household level.


Competition will not only be among power producers but also power distributors. It will also encourage the entry of more players in the energy sector.

PNOC-EC plans to increase coal portfolio

Manila Times.net
Written by : EUAN PAULO C. AÑONUEVO


PNOC-Exploration Corp. is keen on ramping up its coal projects.
Gemiliano Lopez, PNOC-EC chairman and chief executive officer, said the company will participate in the upcoming state bidding for coal exploration and development contracts.

“Pag nagkaroon ng official announcement. But definetely interesado kami,” he said.

Coal is considered one of the cheapest fuel for electricity production and takes up roughly over a quarter of the country’s power generation mix.

The Department of Energy aims to bid out coal operating contracts by December this year in line with efforts to boost the development of the country’s indigenous energy sources.

Among the areas for possible coal concessions are Cebu, Surigao del Sur, and Zamboanga del Norte.

Lopez said the company is well positioned to develop coal resources with its stable of technical experts.

The company also would put up three coal mines in Zamboanga Sibugay at a cost of over P2 billion.

Aside from these mines, PNOC-EC has coal operating contracts in Isabela and Surigao del Sur.

PNOC-EC targets to become a major producer of the commodity in the country. At present, the local coal industry is dominated by the Consunjis who operate mines in Semirara Island, Antique.

PhilMech eyes greater use of renewable energy

Manila Times.net
Written by : James Konstantin Galvez


THE Department of Agriculture said it would increase the use of solar and wind energy to fuel various postharvest and mechanized agriculture equipment to areas that do not have access to traditional power sources.
Ricardo Cachuela, Philippine Center for Postharvest Development and Mechanization director, said the use of stand-alone solar and wind energy systems can allow farmers in far-flung areas to power their small farm operations.

“Far-flung farming areas are mostly impoverished and their access to electricity and fuel is very limited or even non-existent. If they have standalone solar or wind energy systems, they can improve their farming operations by using some machineries like dryers or water pumps which usually need fuel or electricity to operate,” Cachuela said.

In the development of solar energy for drying, PhilMech has designed two prototypes, which include the use of curved steel to harness the sun’s energy, and mirror strips glued to a parabolic shaped board. Traditional solar furnaces use curved mirrors but these are expensive and not locally available.

PhilMech wants the solar furnaces to be made from locally available materials for easy fabrication in the Philippines.

“Using locally available materials would make it easier to manufacture the solar furnace once it is ready for commercialization,” Cachuela said.

In the development of wind energy, PhilMech is set to expand the testing of prototypes of small windmills in farming areas where there are farmer-cooperators willing and capable to test the technology.

Based on PhilMech’s evaluation, the most qualified prospective cooperators are located in the provinces of Nueva Ecija, Aurora, Laguna, Iloilo, Negros Occidental, Tarlac and Lanao del Sur. PhilMech has begun pilot tests in Aurora, Negros Occidental and Laguna this year. 

Boi Approves P5.6-B Solar Plant

Manila Bulletin

By BERNIE CAHILES-MAGKILAT

August 29, 2011, 10:41pm

MANILA, Philippines — The Board of Investments has granted limited income tax holiday to the P5.676 billion 30-megawatt solar power project of wholly-owned Filipino firm ATN Philippines Solar Energy Group Inc.

ATN, a joint venture of ATN Holdings Inc. and Transpacific Broadband Group International Inc., has proposed to sell electricity for P17.95 per kilowatthour. It would employ a total of 30 personnel when it starts commercial operation in December 2013. It is funded by 23.5 percent equity and 76.5 percent debt.

The project is under the Mandatory List of the Investment Priorities Plan and is entitled to incentives under the RE. Law or RA 9513. The firm is also registered with the Department of Energy as a new RE developer of solar energy resources.

In approving the project, however, the BoI said that once the feed-in-tariff (FIT) is in place, ATN should no longer be entitled to income tax holiday as the FIT is in itself the guaranteed return.

This decision is based on its general guidelines which provide that projects with sovereign guarantee or guaranteed rate of return are not entitled to income tax holiday.

However, the BoI Legal Department said that under the RE Act of 2008 (RE 9513), the firm is entitled to all incentives including the ITH. The law provides for a seven year ITH for RE projects. The BoI also noted a position forwarded that non-grant of ITH delivers a major impact on the proposed financial performance as the same is already considered when the proposed FIT was computed.

Given this conflicting positions, the BoI management committee has given instruction to communicate with the Department of Energy on all matters relative to the applicability/implication of FIT in the incentives granted to RE projects.

On the ATN’s proposed a selling price of electricity of P17.95 per kwh, the BoI said that such rate shall still be subject to ERC approval in compliance with the feed-in-tariff rules.

The FIT system is a scheme that involves the obligation on the part of electric power industry participants to source electricity from RE generators at a guaranteed fixed price applicable for a given period of time, which shall in no case be less than 12 years, to be determined by the Energy Regulatory Commission.

Based on its application, ATN will put the plant in the 324 hectare property of ATN Holdings in Montalban, Rodriguez Rizal, which is less than 10 kilometers away from densely populated business districts in Metro Manila.

The company said that its power supply during the peak hours would contribute in the reduction in capital cost of base load generating plants that use imported coal, and save the country’s foreign exchange capital and operating costs for power generating units.

ATN is targeting to serve Metro Manila, particularly the peak demand of mall in the high growth business districts in Quezon City.

It can also sell electricity directly to end users under the Wholesale Electricity Sport Market (WESM) set-up. It may also negotiate with the National Power Corp. as primary off-take customers that will distribute power through the Transco.

The company claimed that its 30-mw solar project is equivalent to 60 million kilowatthours of clean energy.(BCM)

Turning wastes into resource Asia’s biggest challenge, says UN Habitat

By Malu Cadelina-Manar | Monday| August 29, 2011 

GANGWON Province, Korea (MindaNews/28 August) – Turning wastes into a resource is quite a challenge for developing countries in Asia, said a representative from the United Nations Human Settlements Program (UN Habitat).

“The technology’s there, but the problem is financial. This technology needs big capital investments,” stressed Rajesh Manandhar, coordinator of the Water for Asian Cities Program of the UN Habitat based in Nepal.

Manandhar, a lecturer during the 2nd Solid Waste Management (SWM) by community-based campaign held at the International Urban Training Center (IUTC) here set to conclude next week, said there’s a need that countries in Asia explore other technologies, aside from the traditional way of dumping wastes into open grounds, in order to protect the environment and prevent the spread of diseases.

Data from the UN Habitat showed that among the countries in Asia that still use open dumping include Bangladesh, Iran, Nepal, Sri Lanka and the Philippines.

The limited resources of these countries, taking into account the high capital investments on infrastructure, somehow constrain them from spending on SWM advanced technologies, he said.

Fuel derived from wastes

To have a better understanding of Korea’s SWM technology, Manandhar and some IUTC staff toured participants from Asia to several SWM facilities, including the state-of-the-art refuse-derived fuel (RDF) facility in Saje-ri in Wonju, the largest city in Gangwon.

“Instead of using existing processes such as burial at dumpsites, we establish a new system for developing energy resources from daily household wastes,” said Jae-Ha Noh from the Office of Resource Recycling of the Department of Environment Policy in Gangwon Province.

Using a waste converter technology, fuel is derived after shredding the dehydrated solid wastes, mostly plastics and biodegradable refuse.

The RDF facility in Wonju, explained Noh, can produce 40 tons of refused-derived fuel out of 80 tons of garbage collected daily.

The fuel is then sold to cement and paper factory.

“For a ton of RDF, the Gangwon province earns about US$25 or US$350,000 a year,” Noh said.

The Korea government spent some US$11.5 million to build the facility in 2005.

Turning wastes into energy

Korea’s SWM technologies also include incinerators.

There are 13 incineration facilities located in Gangwon, including the SWM Facility in Hongcheon County and the Environmental Energy Center in Sokcho City.

“The heat generated by the incineration, for example in Sokcho City, is used by saunas located inside the facility. Heat recovery from incineration: hot water for apartments near the facility and electricity for office through the hot steam,” said Noh.

He stressed that the initial cost of advanced facilities would be much less than the cost in the future, thus, “changing wastes into resource and energy is highly economical.”

The use of the technology, however, is not that easy, said Manandhar.

“It requires careful understanding and cautious selection, proper monitoring of the technology adopted, flexibility, operational resource management, and continued research and development,” he added.

Philippines’ Clean Air Act

The Philippines is not keen on putting up incineration facilities since the passage of the Republic Act 8749 or the Clean Air Act.

The law bans the use of incineration or the burning of municipal, biomedical and hazardous wastes, which process emits poisonous and toxic fumes.

The government, instead, tasked the Department of Environment and Natural Resources (DENR) to promote the use of state-of-the-art, environmentally-sound and safe non-burn technologies for the handling, treatment, thermal destruction, utilization, and disposal of sorted, un-recycled, un-composted, biomedical, and hazardous wastes.

The available SWM technologies in the Philippines include sanitary landfills and material recovery facilities.

Sustainable SWM technologies

Manandhar said that for solid waste management technology to be sustainable in a certain country, especially in Asia, it needs to consider human resources, finance, operation and management, and treating all stakeholders as partners.

“Also, the government has to conduct consultations and consensus from stakeholders during formulation of policies and regular reviews should be conducted by both public and private agencies, including the service providers,” he concluded. (Malu Cadeliña Manar / MindaNews)

[The writer is a participant to the IUTC training and presented a case study on the “Role of news media, e-media included, in enhancing the campaign on solid waste management.”]