DOE tells Mindanao utilities to ensure enough power

Business Mirror
WEDNESDAY, 07 MARCH 2012 19:15 PAUL ISLA, MANUEL CAYON


THE Department of Energy (DOE) on Wednesday urged Mindanao-based distribution utilities and electric cooperatives to ensure that the power they promised to supply Mindanao is adequate.


“Users must contract their required generation to ensure that new generation is put in place,” Energy Secretary Jose Rene Almendras said.


From the DOE’s assessment, Almendras said that aggravating the current situation in Mindanao is the observed non-compliance by some electric cooperatives to nomination, dispatch and curtailment protocols. 


He said there are distribution utilities and electric cooperatives that do not contract enough power supply for their actual needs and have thus been overdrawing power, causing problems in grid management.  


Almendras said they have already instructed the National Grid Corp. of the Philippines (NGCP) to make the needed technical upgrades so the distribution system will shift to a mandatory curtailment from voluntary curtailment, and will enable them to disconnect those distribution firms, electric cooperatives, and other bulk consumers of electricity if they withdraw power beyond what is contracted.


The DOE said the Mindanao grid has been experiencing frequent red alert notices from NGCP which led to actual power curtailments in some parts of the grid. Projected peak demand in the region is at 1,300 megawatts (MW) while available capacity for Mindanao is only at 1,110 MW, exclusive of the 200 MW from the power barge of Therma Marine Inc.


The DOE said the demand does not include the required reserve margin to maintain the integrity of the grid as mandated by the Grid Code which is currently pegged at 250 MW.


Almendras said the DOE is already setting up meetings with the Energy Regulatory Commission, Mindanao legislators, and already consulted concerned agencies such as the NGCP, National Power Corp., the Power Sector Assets and Liabilities Management Corp., electric cooperatives, and other stakeholders for a circular that will be issued regarding the current Mindanao power situation by providing a short-term solution for Mindanao as it did in 2010.


In Davao City, the NGCP said ancillary services jumped 7.88 times from the 2009 level when the National Power Corp. (Napocor) relinquished subsidized operation of the power barges to the private companies.


NGCP, the transmission firm, said consumers were likely to pay these services due to the inadequate power supply still hitting the Mindanao grid.


The NGCP said the transmission rates have remained stable in the past few months but due to the private operation of the two power barges that support the Mindanao grid supply requirement by providing additional megawatt supply, charges for ancillary services, or the fee given to the operators of the barges, would continue. 


From P77 per kilowatt (kW) consumption in December 2009 when the supplying power barges were still owned by the Napocor, , the fee jumped to around P607 per kW in April 2010, when the scorching El Niño dry spell dried up the main hydroelectric plant sources in the Agus River in the Lanao provinces, and Pulangi River in Bukidnon. 


The NGCP said the increased charge would not earn for NGCP when it collects the ancillary charges from its “direct load customers which include distribution utilities private utilities, electric cooperatives, government-owned utilities, ecozones], and large industries, government and non-government companies directly connected to the grid”.


“The NGCP bills and collects ancillary services charges from its direct customers then remits these collections to the ancillary services provider per an Ancillary Services Procurement Agreement (ASPA) approved by the Energy Regulatory Commission (ERC). As the collecting agent, NGCP does not get revenues from the said fees,” it said in a statement furnished to BusinessMirror on Tuesday. 


The ancillary services charges in Mindanao “are based on prevailing world market prices for fuel used in running the power barges which supply the ancillary services. The charges are not subsidized anymore by the government and thus reflect the true cost of electricity per current market forces.” 


The Mindanao grid, running at 1,500 mW, gets its additional load requirement from Power Barge 117 moored offshore Barangay Santa Ana, Nasipit town of Agusan del Norte and Power Barge 118 lying offshore of barangay San Roque, Maco town, Compostela Valley. The two barges, with a capacity of 100 mW each, are owned by a unit of the Aboitiz Group.