‘Brownouts will hound PHL in next few years’

By Lenie Lectura- April 30, 2019

https://businessmirror.com.ph/2019/04/30/brownouts-will-hound-phl-in-next-few-years/

THE chairman of the country’s largest power-distribution firm warned on Monday that the country would continue to experience power shortage in the next few years unless more capacity is added to the grid.

“The continuing yellow and red alerts being experienced today may eventually lead to serious power- supply shortage in the next few years, unless immediate action is done to resolve the root cause of the problem, by adding more generating capacity and taking decisive action on the much-delayed construction of new power plants,” said Meralco Chairman Manuel Pangilinan.

Meralco’s seven power-supply agreements entered into with various power supplies have yet to be approved by the Energy Regulatory Commission. The approval of the PSAs is crucial because the project proponents could not start construction until the ERC gives its green light.

Atimonan One Energy Inc.’s first 2x 600-megawatt (MW) power plant, which was already certified as an Energy Project of National Significance, awaits ERC approval. It was filed on April 29, 2016.

Meralco PowerGen (MGen) Corp., the power-generation arm of Meralco, noted that if this power project had been approved on time, then at least 600 MW would have been added to the grid this year.

“We have already reached in April the peak demand level that was recorded in May last year. At least 626MW is needed and this is just about the estimate that the DOE keeps on saying. So, the DOE is right in saying that we need new capacity of 600MW every year as demand keeps rising,” noted MGen President Rogelio Singson.

Pangilinan said that while the private sector continues to heed the government’s call in putting up capital-intensive power projects, industry players could not stress enough the support they need from the regulators.

“I could say I was vindicated but it does not change the situation. So, we just address the current situation…I am afraid I’d get criticized for saying this: This is going to be with us for next two to three years,” said Pangilinan.

He urged the government to “get their approval processes done as quickly as they can” so that consumers won’t suffer from power outages and high electricity costs.

“I don’t understand, that’s the money of the private sector…. Let the people who have the means and reasons for building power plants, be it coal or gas, to build the capacity. I really don’t know what they are looking for. Sigurado, mangyayari na naman ito [For sure, this will happen again] next year,” warned Pangilinan.

Pangilinan was referring to the rotational brownouts that hit Luzon this month.

Eighth red alert

For the eighth time this month, the Luzon grid was placed on red alert on Monday. A red alert notice is raised when there is severe power deficiency and zero contingency reserve. When the red alert is issued, power interruptions are expected to happen.

“We are still on red alert today. In fact it’s already the eighth day of manual load dropping that Meralco has been doing since April 10. One of the reasons for the deficiency is there are still three plants in Bataan that are still isolated from the grid,” said Meralco Head of Networks Ronnie Aperocho.

The GN power unit 2 and the two units of the San Miguel plants in Limay are still offline, following the 6.1-magnitude earthquake that hit Luzon last week. These three plants have a combined capacity of 660MW.

“Our forecast is even if these three plants would be able to go back to the grid because of the increasing power demand during the summer months, especially next month, we still see several days of yellow and red alert and will even, in fact, extend until the month of June,” said Aperocho.

The recent spate of yellow and red alerts signal an increase in spot market prices. In fact, the market operator said that the secondary price cap was triggered twice in the April supply month, which implied that there were sustained high prices in the market.

“While we are anticipating lower coal and natural gas prices from IPPs and PSAs, these maybe more than offset by the higher spot prices, which we will see as a higher generation charge this May,” said Meralco Head of Utility Economics Lawrence Fernandez.

The ERC, for its part, has been saying that the only time it can act on the pending PSAs is when the Supreme Court has decided on the case.

“The problem is nasa [with] SC. Wala kami magagawa [There’s nothing we can do]. Hope the SC will be compelled to act on it,” said Pangilinan.