Rotating brownouts far from happening–DOE

Business World Online

12 Jan 2014 

 

Written by Lenie Lectura

A MID the warning issued by Manila Electric Co. (Merlaco), Energy Secretary Carlos Jericho Petilla assured the public that rotating brownouts are far from happening because power producers are “responsible players.”

“If we would have a brownout it’s not because we don’t have supply here. We are not talking about lack of supply here but it’s more of a commercial issue between Meralco and power producers.  Meralco is saying ‘I can’t collect so I won’t pay you,’ while generators are saying ‘we’ve spent for this already. You have to pay for this and we’ve billed you.’ I don’t think we would go to that extent of saying that we will all have brownouts because I’m not getting paid. I think the generators are responsible players in the industry,” Petilla said.

The Supreme Court (SC) temporarily prevented Meralco from collecting the generation charge of P4.15 per kilowatt hour (kWh) reflected in the December billing of consumers.

The said generation charge represents the cost of power purchased by Meralco from power generators for the month of November. It is the biggest component of electricity cost, accounting for 65 percent.

If Meralco will not be able to collect from consumers, it also cannot pay what it owes to the power producers. The country’s largest distribution firm said it has received demand letters from them and from the National Grid Corp. of the Philippines (NGCP) for P111 million worth of unpaid power transmitted.

In its comment submitted to the SC, Meralco said San Miguel Energy Corp., for instance, is demanding the utility firm to pay P8 million for the power delivered. AES Masinloc, meanwhile, asked Meralco to immediately pay P436 million. South Premier Power Corp.  wants to be paid P856 million.

Meralco explained that if it is unable to collect the increased charges from the consumers, it then faces “the great risk of not being able to purchase all the electricity needed for the succeeding months, especially if abnormal or extraordinary supply-versus-demand conditions continue.”

Eventually, it said, blackouts will do occur. “While the TRO is effective, Meralco is at an undue, ever-present, and constant risk and threat of being required to pay the full amount of the increase in generation and transmission charges or of being denied continued access to electric supply and transmission under its PSAs [power supply agreements], the WESM [Wholesale Electricity Spot Market] and the relevant ERC (Energy Regulatory Commission) regulations,” it added.

Petilla said Meralco has started to pay power suppliers, the NGCP and the operator of WESM in installments.  “I am confident that the generators, even if they are not paid in full at this point, don’t want to cause any brownouts. The generators see Meralco as a long-term client. Meralco sees generators a long-term supplier. It’s a long-term relationship that they have,” Petilla stressed.

But the energy chief is worried in the case of smaller power plants that could run out of fuel to power up their facility just because Meralco failed to pay the operators of these power facilities. “What I am afraid of is if there are some smaller companies who do not have money to buy fuel anymore because they didn’t get paid. That’s my biggest fear. I’m just not sure which power plants are in danger of running out of fuel,” Petilla said.

To avert this, the Department of Energy (DOE) will conduct an inventory. Petilla said the agency must identify which particular companies are going to have problems.  “The way I look at it, it’s going to be the oil-based companies, the diesel plants. We’re now going to get in touch with them and ask them ‘what is your inventory position? How long are you going to be ready for summer?’ So, that’s what we’re looking at. We’re also looking at various ways of actually giving them the fuel if in case the issue between Meralco and the generators are not resolved between them.”

Petilla stressed that there is enough supply of electricity for this year. The DOE just has to make sure that all power plants are up and running.   “I don’t see any reason why we would have a problem in 2014 at this point. Except for outages that are scheduled but there’s also an allowance.”

If and when the TRO is lifted, Petilla assured the public that his agency will not allow Meralco to collect in full the generation charge for the succeeding months.

“We will try to make sure that there’s some mitigation here so as not to charge consumers in one go. It’s the decision of the ERC, but we can always make a recommendation, which is to stagger it for as long as possible. Cushioning the impact is what were looking at here,” he said.

The January generation charge still stands at P5.67 per kWh in deference to the TRO although the actual generation charge has risen to P10.23 per kWh. Meralco awaits instructions from the SC and the ERC on how to collect the full amount of P10.23 per kWh.   source