Business World Online
Posted on October 21, 2014 11:13:00 PM
By Claire-Ann M. C. Feliciano, Senior Reporter
THE GOVERNMENT still wants to be able to acquire additional megawatts to bridge an energy shortage expected to strike Luzon in summer next year, fearing capacities now among private firms with generator sets may not be enough to cover the gap, officials said yesterday.
Their pronouncement prompted business leaders to press for clear signals from government on how it plans to address the problem just five months away.
Officials of the Department of Energy (DoE) made the clarification yesterday after they were quoted as saying on Monday that the government would rely primarily on the Interruptible Load Program (ILP) to plug the power gap from March to June -- a stand espoused by many business groups. The ILP is a scheme that compensates big electricity users that rely on their own generator sets in order to ease demand and supply the grid during peak hours.
“The concern on the ILP, as of now, is that it’s still limited,” Mylene C. Capongcol, a director at DoE’s Electric Power Industry Management Bureau (EPIMB), told reporters in a briefing in Bonifacio Global City.
“Based on experience... only 45-70% of committed ILP capacities are dependable.”
As of yesterday, 155 megawatts (MW) from 25 companies had been signed up with the ILP of Manila Electric Co., which continues to negotiate for capacity commitments. Earlier this month, DoE had set Dec. 19 as the deadline to secure commitments for the ILP, a timetable business groups said was realistic.
On Monday, DoE officials told legislators in the House of Representatives that up to 678 MW will be needed to cover both generation deficiency and provide minimum reserves -- with the worst-case scenario arising in the second week of April -- compared to a 900-MW maximum projected earlier this month.
Irma C. Exconde, another EPIMB director, said in the same briefing that Luzon needs at least 647 MW in reserves at any given day, equivalent to the biggest power plant unit in Luzon which is with Sual coal plant in Pangasinan.
DoE officials at the briefing said a shortage of 100 MW is roughly equivalent to a one-hour daily outage for the deficiency’s duration.
While business groups last month expressed confidence ILP commitments could provide up to 700 MW, DoE officials cautioned yesterday that they could not factor in capacities of firms that have not yet committed to the program.
“There are a lot of manifestations, but it is hard of us to include them in the computations except those that have already signed up,” Ms. Capongcol said, adding that DoE is still pushing for authority for government to acquire additional megawatts “just to be sure”.
“We are pushing for contracting of additional capacities... because we are not assured of the availability of other options like ILP [sic],” Ms. Capongcol said.
“The additional generating sets will not be available overnight, so we need to undergo a procurement process, which will take time.”
Energy Secretary Carlos Jericho L. Petilla told reporters last month the government would need six months to lease generator sets.
DoE officials yesterday reiterated such additional capacities will be tapped only when supply falls below demand.
IMPACT FEARED WORSE
Luzon’s looming energy crisis recalls a similar situation that arose in 2010 in Mindanao, which saw a power shortage of up to 600 MW -- half the entire island’s capacity -- that triggered outages of up to eight hours on many days of the week.
A similar situation for Luzon, however, set off alarm bells as the entire island is estimated to contribute about 70% to gross domestic product (GDP), with Metro Manila, Central Luzon and the Cavite-Laguna-Batangas-Rizal-Quezon (Calabarzon) region collectively accounting for 62% of GDP and Metro Manila alone contributing 36%.
President Benigno S.C. Aquino III last month formally asked Congress for additional options in the face of the looming problem, invoking the crisis provision of Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001. That, in turn, set legislative wheels in motion to approve the envisioned joint resolution.
Proponents had earlier set Oct. 29 as deadline for approval of the resolution that would give the Executive from March to June next year an arsenal of options ranging from an intensified energy conservation program to temporary acquisition of additional megawatts to plug the gap.
After being told on Monday that the Executive may rely primarily on the ILP, however, House Energy committee chairman Rep. Reynaldo V. Umali of Oriental Mindoro (2nd district) said there was no longer any reason to rush approval by next week of the joint resolution concerned.
Hence, he moved deadline for the proposed resolution -- which would focus on the ILP, ensuring plants under construction go online as scheduled, and an intensified energy conservation drive that could involve both perks and sanctions -- to Dec. 1 from Oct. 29.
The draft resolution being prepared by the House panel states, in part, that: “[a]dditional generating capacity shall be preferentially sourced from the Interruptible Load Program, fast-tracking of committed projects and plants for interconnection.”
UNCERTAIN
Extent of the problem next year, however, has yet to be determined given “moving numbers” and “daily developments” with power projects scheduled to go online.
EPIMB’s Ms. Exconde explained that the department cut its estimate of needed additional capacity to less than 700 MW from 900 MW due to updates showing some planned power plants could go online ahead of schedule.
These were identified as Millenium Energy, Inc.’s 100-MW plant in Navotas and 36-MW plant in Bataan; JG Summit Holdings, Inc.’s 60-MW plant in Batangas; and CBK Power Co. Ltd.’s 20-MW plant in Laguna.
Sought for comment on DoE’s statement on ILP’s dependability, Mr. Umali replied: “That has always been the issue. We are not withholding anything but I don’t think we need to approve it (resolution) this October.”
His counterpart at the Senate, Sergio R. Osmeña III, said DoE should publicize dependable capacities to provide a clear “benchmark” for assessments of the power situation and required preparations.
‘SUPER CONFUSED’
Malacañang, however, yesterday insisted its request for provisional options remains urgent.
“The DoE projects that even in the best possible scenario, there may not be an actual shortage but the level of reserves in the summer of 2015 will be minimal or thin,” Communications Secretary Herminio B. Coloma Jr. told reporters in a briefing at the Palace.
“Moreover, if there will be unexpected breakdowns or unscheduled maintenance of electric power plants, the thin reserves may be depleted, thereby causing rotational brownouts.”
Hence, Mr. Coloma said, the need for government to have all available options at its disposal, including leasing of generator sets for additional megawatts.
Business groups said the changing outlook has caused confusion.
Management Association of the Philippines President Gregorio S. Navarro still believes ILP can plug the shortfall but expressed doubt on state projections. “I think the ILP will likely address the shortfall, but not the reserve power in case any of the plants shut down or are unable to deliver,” Mr. Navarro said in a text message. “Unfortunately, there are so many forecast figures being mentioned by the DoE, we are no longer sure what really is the power outlook and shortfall.”
The European Chamber of Commerce of the Philippines (ECCP) likewise questioned the changing outlook. “Can DoE be more consistent on what the estimate is?” ECCP Executive Vice-President Henry J. Schumacher said via text. “Business is super confused.”
Mr. Schumacher said ILP can bring in 785 MW and energy efficiency, 419 MW -- totaling 1,204 MW from the private sector. “If the DoE believes only 50% is realistic, that gives us 600 MW. So what’s the problem?” he said.
Peter Wallace, governor of MAP’s Energy Committee, noted that ILP will be less expensive for the government. “Government can get enough reserve from ILP... It’s far cheaper than buying additional capacity for which a budget of P6 billion was proposed,” he said.
Mr. Wallace said relying fully on ILP should be “doable... if the government actively calls for ILP participation and fully supports the cost to companies.”
The Philippine Chamber of Commerce and Industry last month estimated that running ILP capacities for five hours, five days a week with fuel cost at 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.” -- with inputs from Melissa Luz T. Lopez and Imee Charlee C. Delavin source
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