Palace to get extra powers on crisis eve

Business World Online
Posted on December 08, 2014 10:50:00 PM
By Melissa Luz T. Lopez, Reporter
and Claire-Ann M. C. Feliciano, Senior Reporter

MALACAÑANG will likely get the special authority it needs to deal with Luzon’s power crisis just a month ahead of the problem next year, a timetable business leaders said would still provide leeway for action though it would be cutting it close.

President Benigno S.C. Aquino III invoked the power crisis provision of the Electric Power Industry Reform Act of 2001 last September after the Energy department bared a power shortage that would hit Luzon -- which contributes about 70% to national output -- from March to July 2015.

While the joint resolution was initially meant to allow government to contract additional megawatts (MW) for that period, the country’s chief executive has settled for less controversial measures like the Interruptible Load Program (ILP) that encourages firms to run their generator sets in order to reduce demand on the grid and an invigorated energy conservation drive. Noting that it takes about six months for government to lease generators, Mr. Aquino said time has run out for this option.

Sergio R. Osmeña III, who heads the Senate’s energy committee as chairman, said his chamber can approve the resolution on third and final reading by early 2015. “The Senate can approve the resolution by the end of January without causing undue delays,” Mr. Osmeña said in a text message on Friday last week.

The measure may no longer have to secure bicameral conference committee approval, provided both chambers have the same or similar versions with little difference. The Energy department will then have up to 30 days to issue the needed implementing rules and regulations (IRR), which will depend on the final form the measure will take.

Mr. Osmeña had earlier said his chamber would wait for the House of Representatives to approve the joint resolution. “We will wait for their version and study it carefully. We may either amend it or draft our own,” he said.

The House is holding plenary debates on the joint resolution, which it aims to approve before Congress takes its month-long Christmas-cum-New Year break starting Dec. 20. After that, the chamber will transmit the measure to the Senate for action.

Luzon is estimated to need additional capacity of up to 1,004 MW, including 404 MW in contingency reserve.

The resolution provides a “carrot-and-stick” scheme to encourage participation in the ILP, pushes for the fast-tracking of committed power projects, as well as energy efficiency and conservation measures.

The option to buy or lease additional generators has long been scrapped by lawmakers, estimating this would cost government at least P6 billion. Lawmakers now consider ILP as the main option. Under this scheme, private companies registered with the program that run their own generating sets will be reimbursed for fuel and operation costs, with value-added tax deemed paid and immediately refunded on paper.

Noting that the joint resolution’s IRR will be issued up to 30 days after the measure’s approval, House energy committee chairman Rep. Reynaldo V. Umali of Oriental Mindoro (2nd district) said via text: “Perhaps, DoE (Department of Energy) should start drafting it now in anticipation of the joint resolution approval.”

Sought for comment, Mylene C. Capongcol, director of DoE’s Electric Power Industry Management Bureau, replied via text: “We can start drafting the IRR, but it would be hard to guess the final version of the joint resolution that will come out.”

Asked further on the Senate’s target to approve the measure by end-January, Ms. Capongcol said: “That would result in less time to prepare and do things in accordance with the joint resolution.”

“It is not the government that will be disadvantaged in case the joint resolution gets delayed,” she added.

“But it’s okay because ILP is a continuing program and I think we can still accommodate more participants.”

Latest available DoE data showed that registered ILP commitments stood at 191.47 MW as of Dec. 1, with 484.71 MW potential capacities still under negotiation.

Business leaders were cautious in their views.

“January is a bit tight, but still doable. The issue is whether the incentives are there to encourage more ILP participants,” said Gregorio S. Navarro, president of the Management Association of the Philippines (MAP), via text.

Peter Wallace, governor of MAP’s energy committee, concurred, saying: “It’s tight, but not critical since much of ILP has been achieved already.”

European Chamber of Commerce in the Philippines Executive Vice-President Henry J. Schumacher said: “The earlier, the better... But all preparations for ILP and active investment in energy efficiency and energy savings can already be done in the meantime.”

For John D. Forbes, senior adviser of the American Chamber of Commerce of the Philippines: “The principal value of the resolution being passed so late is to support the ILP and energy efficiency campaign.” source