All available power sources eyed to stem Mindanao crisis

Business World Online
Posted on February 28, 2012 09:20:08 PM


ELECTRIC COOPERATIVES and power generators will be required to tap all available sources to stem a worsening electricity shortage in Mindanao due to maintenance shutdown of facilities and the onset of summer, an Energy official said yesterday.


"We are drafting a new circular [to use all available power] with additional provisions based on meetings with the energy family including the National Power Corp., National Electrification Administration, National Grid Corporation of the Philippines (NGCP), Power Sector Assets and Liabilities Management Corp. (PSALM) and the general managers in Mindanao," Energy Undersecretary Josefina Patricia M. Asirit said in a text message.


"The circular will be redefined so distribution utilities and electric cooperatives have to do their own demand side management," she added.


Mindanao has been experiencing rotating brownouts in the past few weeks.


The island’s normal power requirement ranges from 1,400 megawatts (MW) on weekdays to 1,200 MW on weekends. As of yesterday, NGCP’s Web site showed a 211-MW deficiency.


The power shortage is expected to prevail into the summer months as the island is highly dependent on hydroelectric power.


"There really is a deficiency in generation... We were constrained because there are some downed plants...," said Ms. Asirit.


A similar circular was implemented in 2010 at the height of a dry spell that forced the temporary closure of Mindanao’s hydroelectric power plants. The circular particularly targeted power barges 118 and 117 owned and operated by Aboitiz Power Corp. subsidiary Therma Marine, Inc. which was contracted to provide ancillary power to NGCP. These provided around 100 MW combined.


Rates from ancillary power are more expensive.


"We are waiting for the direction of the Energy department for Mindanao. One of the options is to release a circular which will give us the legal cover to dispatch all power as energy which we will of course follow," said NGCP Spokesperson Cynthia D. Perez- Alabanza in a telephone interview.


The NGCP is still negotiating a new contract with Therma Marine, she added, "so we do not have that capacity [as of now]."


Aboitiz Power could not be reached for comment.


Two years ago, at the height of a dry spell, the island’s power deficiency peaked at 600 MW resulting in daily power outages that last for as long as 10 hours.


Power demand in Mindanao is projected to rise by 4.65% this year which will further put pressure on limited resources.


In a related development, Finance Secretary Cesar V. Purisima has urged the Energy Regulatory Commission (ERC) to act on the long-standing appeal of the Power Sector Assets and Liabilities Management Corp. to impose a universal charge.


"The ERC should already approve the filing of PSALM for a universal charge. I believe that the increase is very reasonable and is spread out over a wide period," Mr. Purisima, also the chairman of the state-run energy firm, said on the sidelines of the Bureau of Internal Revenue’s 2012 Tax Campaign Kick-Off yesterday.


PSALM filed a petition for a universal charge of P0.39 per kilowatt-hour (kWh) with the ERC in July. The P140 billion covered by the petition only involves the stranded debts and costs of Napocor. The petition is still pending.


The state-owned firm is allowed by the Electric Power Industry Reform Act of 2001 to file petitions for a universal charge -- a pass-through cost to consumers -- to help pay for its debts.


"If the ERC thinks the universal charge filed for in the petition is too high, then they should call for a public hearing. But there must be some action on the proposal. The debt of PSALM just continues to grow," Mr. Purisima warned.


PSALM’s debts are estimated to total $18 billion. Of this, $8.7 billion comprise obligations to independent power producers while $7 billion are debts incurred by the National Power Corp.


Consumers may oppose the hike in their power costs, but the Finance chief said that somebody has to pay for the liabilities.


"Unfortunately, there is no such thing as a free lunch. Either the consumers carry the universal charge or the taxpayers shoulder the debts," Mr. Purisima said. -- E. N. J. David and D. C. J. Jiao