Business World Online
Posted on September 16, 2014 10:26:00 PM
By Claire-Ann M. C. Feliciano, Senior Reporter and Melissa Luz T. Lopez
MALACAÑANG has invoked the power crisis provision of the Electric Power Industry Reform Act of 2001 (EPIRA), seeking congressional authorization for the Executive to buy additional megawatts despite warnings by some business groups this could jack up electricity rates.
In a letter dated Sept. 12 and received by both chambers on Monday, President Benigno S.C. Aquino III sought “immediate enactment of a joint resolution authorizing the President to establish additional generating capacity.” The country’s chief executive said the move was in accordance with Section 71 of Republic Act No. 9136, otherwise known as the EPIRA.
Such provision states that “upon determination by the President... of an imminent shortage of the supply of electricity, Congress may authorize, through a joint resolution, the establishment of additional generating capacity under such terms and conditions as it may approve.”
Mr. Aquino cited the Energy department’s projection of a “critical electricity situation” in the summer months of 2015, especially in the face of “expected effects of the El Niño phenomenon” as well as the scheduled shutdown of the Malampaya gas-to-power project from March 15 to April 14 next year.
Mr. Aquino also cited “increased and continuing outages of power plants, and anticipated delays in the commissioning of committed power projects.”
“There is no gain saying that the imminent electric power shortage during these months is a real threat to the country’s growing economy and the general welfare of the people,” the letter read.
“The speedy enactment of the Joint Resolution will ensure the energy requirements of the country for this critical period -- through a specific, focused and targeted acquisition of additional generating capacities for use during limited periods of time of very tight energy supply.”
Leaders of both chambers of Congress said they would act on the President’s request.
“On the time table, it is impossible to have it by the end of September because we don’t even have a draft joint resolution. We don’t know the parameters of the authority being requested,” Senate President Franklin M. Drilon told reporters after the Energy department’s budget hearing yesterday.
“We know the urgency, but we can’t rush into this. We will work as fast as we can.”
Mr. Drilon also said that the Senate Committee on Energy, headed by Senator Sergio R. Osmeña, will meet on Wednesday next week to tackle Malacañang’s request.
Senator Osmeña said separately that while the electric power industry is complicated, there are ways to solve the looming problem. “For me to explain this is going be impossible for such a short period of time. But your committee will definitely look for many other ways to help resolve this problem,” he said.
But Mr. Osmeña said consumers should “lower overall demand” as part of a long-term solution. “We have to teach people how to turn off the lights. How to turn off their TV sets, how to turn off their karaokes. All of those will help.”
Oriental Mindoro Rep. Reynaldo V. Umali (2nd District), chairman of the House of Representatives Committee on Energy, said the body will wait for parameters that will be provided by the Energy department.
“As soon as the Department of Energy has provided us with all of the details, we will start working on it. Right now, we do not know the parameters yet,” he said.
The lawmaker said the committee will also wait for government notice on actual capacity to be contracted.
Asked for a timetable, Mr. Umali said: “I am looking at October at the latest [for the resolution] to be approved by the House. I do not know about the Senate.”
He added that the members of the House of Representatives could convene, if asked, even during the three-week break that will run from Sept. 27 to Oct. 19.
“Most probably, we will meet. Right now, the more important thing is to clarify what kind of emergency power is being asked from us,” Mr. Umali said.
Luzon grid would need additional 600 MW next year to cover the expected deficit of nearly 300 MW and an equal volume of reserves.
Energy Secretary Carlos Jericho L. Petilla said separately yesterday that he will coordinate with lawmakers.
“What we want is an additional 300 MW from power generating capacity that will be leased through PSALM,” Mr. Petilla said, referring to the Power Sector Assets and Liabilities Management Corp.
“Our standards include least-cost price, shortest term of contract, and ability to deliver power when needed,” he added.
COST
Mr. Petilla also said that cost of contracting additional capacity could reach P6 billion.
“Our initial estimate is P6 billion for the contracting... that doesn’t include fuel costs,” he said after the department’s budget briefing at the Senate in Pasay City.
He added that the department recommended sourcing the payment from the Malampaya fund.
“That’s our recommendation, but of course, it will be subject to discussions among lawmakers,” Mr. Petilla said.
Business groups last week expressed mixed reactions to Mr. Aquino’s decision to invoke the law.
While most of them welcomed the move to address the looming power problem, some are still pushing for a more effective implementation of the interruptible load program (ILP). The ILP is a measure by which big consumers voluntarily run their own generation sets to ease power demand in exchange for compensation.
A check with the Department of Energy showed a total of 142 MW currently enrolled under ILP, but only 71 MW expected to be generated at any given time.
Last week, the Philippine Chamber of Commerce and Industry (PCCI), Makati Business Club, Semiconductor and Electronics Industries in the Philippines, Inc.; the American, European and Korean chambers; cement and steel manufacturers; as well as locators of the Philippine Export Zone Authority committed to provide additional 300 MW under the ILP.
PCCI said running these capacities for five hours, five days a week -- assuming fuel cost of P45 per liter -- “is estimated to increase the consumer’s bill by approximately P0.08 per kWh (kilowatt-hour) only for the month that the ILP is implemented.”
But utilizing ILP capacities will avoid even higher costs that could be incurred were the government to contract additional capacities under a “take-or-pay” fixed-term lease with government subsidy. source
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