DOE directs power firms to submit report on project delays

Published April 14, 2020, 10:00 PM By Myrna M. Velasco
https://business.mb.com.ph/2020/04/14/doe-directs-power-firms-to-submit-report-on-project-delays/

The Department of Energy (DOE) is requiring power companies to submit a list or formally report on billion-pesos worth of power projects that will likely be delayed or deferred because of the enhanced community quarantine (ECQ) relative to the novel coronavirus (COVID-19) pandemic.

At this stage, the department indicated that the first unit of the 1,336-megawatt Dinginin coal-fired power facility will likely have its commercial operations moved, instead of it getting on stream by June this year.

“Initial information at the start of the ECQ indicate potential delays with the Dinginin project,” the DOE said, albeit it emphasized that it has yet to receive formal communication from the project developers.

Other projects seen affected are the transmission line upgrade/reinforcement and expansion ventures of concessionaire-firm National Grid Corporation of the Philippines (NGCP) due to stalled works on projects following the lockdown declaration last month.

“The NGCP also informed the DOE that it unilaterally suspended its projects,” the energy department said, although it noted it has yet to secure definitive list from the company as to which specific projects had been impeded.

“We asked our stakeholders, including the NGCP, to confirm which of their respective projects will be delayed, why they have suspended their operations and to provide a catch-up plan if they’re indeed delayed,” the energy department stressed.

Early on, the DOE has hinted probable delay in the ₱52-billion Mindanao-Visayas Interconnection Project (MVIP) that has been initially targeted for completion until the end of this year.

The department said the portions of the project under NGCP’s charge “are on time”, but there are other facets that may cause delay in the link-up’s completion, primarily the tedious process of securing right-of-way (ROW) clearing.

Nevertheless, the DOE emphasized it has yet to assess as to what components of the project are being hobbled; and how soon these can be addressed. The MVIP spans across 184 circuit-kilometers of high voltage direct current (HVDC) submarine cables, plus 526 c-km of overland wires – with its landing point in Dapitan. Zamboanga del Norte while the other end of its stretch will be in Santander, Cebu.

With the interconnection of the Visayas and Mindanao grids, the surplus capacity from the latter could be shared to Visayas and then to Luzon – at the scale of the line’s 450-megawatt carrying capacity limit.

Mindanao has an excess capacity of roughly 2,000 megawatts; and if part of that could be funneled to Visayas and Luzon grids, it should be a very helpful addition to supply in the strained biggest power grid of the country.

It was previously estimated by NGCP that around ₱0.03 per kilowatt hour (kWh) will be added in the electricity bills of consumers once the MVIP reaches commercial operations.

But the company qualified the final amount of the pass-on cost impact to consumers will fully lean on the approval that will eventually be rendered by the Energy Regulatory Commission.

The transmission firm has yet to enter its fourth regulatory reset under the performance-based rate (PBR) methodology on its tariff setting; and that will be a key determinant on the pass-on of its investment costs.

The ₱52 billion announced capital spending is also just the baseline and the final project cost has yet to be estimated and filed with the ERC on corresponding cost recovery undertaking.

The link-up of the Visayas and Mindanao power grids had long been planned, but it proved elusive for several decades. But once the project is concretized, it will realize the country’s wish of having a single, unified power grid.

With interconnected grids, NGCP opined that “power transmission services in the country will be more reliable as there will be less power interruptions nationwide due to the sharing of local energy resources,” that in turn could help boost investments, infrastructure development as well as commerce in the country.