Weighing Mindanao’s power problems and options (1)

FASTLANES By BenCyrus G. Ellorin | Wednesday| September 15, 2010 | Filed under: Mindaviews

CAGAYAN DE ORO CITY (MindaNews/14 September) — Monday’s 9-hour brownout in southern Mindanao and parts of northern Mindanao was part of the power problem of Mindanao, the incompatibility of the transmission system between these two regions of the island.

More than 10 years ago, we have argued that to solve the immediate power problem in the island, a power plant needs to be put up in southern Mindanao and the upgrade of the Mindanao grid transmission system should be done in earnest.

Solid economic growth in southern Mindanao anchored on the two growth areas in Davao City and the Socksargen area (South Cotabato, Koronadal, Saranggani, General Santos) has made it a net importer of power from northern Mindanao, which hosts the powerhouse of the island, the Agus hydroelectric complex cutting across Lanao del Sur and Lanao del Norte and the Pulangi IV hydroelectric plant in Bukidnon.

The context of our argument at that time is the timeliness and location of the 200-mw Mindanao coal-fired power plant in Villanueva, Misamis Oriental which was proposed then.

For starters, bringing in power to southern Mindanao from the Mindanao grid hub in Lanao del Norte is very costly as it needs the use of expensive transformers, not to mention the high power dissipation rate caused by reducing power from the 230-kilovolt transmission lines in northern Mindanao to the 130-kv transmission lines in the southern part of the island.

It is like transferring water from a 12-inch pipe to an eight-inch pipe.

But upgrading Mindanao grid’s power transmission lines is just one of the issues of the Mindanao power problem. The bigger problem is what to put in those transmission lines from generating plants.

About 10 years ago, we argued that Mindanao does not need the 200-mw Mindanao coal-fired power plant in Villanueva, and even pointed out that the plant, one of the controversial contracts signed with Independent Power Producers (IPP) at the close of the Ramos administration, is not necessary.

In 2003, we come up with a study arguing that the Philippine Energy Plan of the Dept. of Energy (DOE-PEP) covering 1995-2004 was faulty and that the projected power shortage in the island was not coming in the next six to 10 years.

Moreover, with global warming and upward volatility of fossil fuel prices in the world market (i.e. crude, coal, diesel), there is still enough time to build renewable energy sources like hydro electric power plant, work on the expansion of the Mt. Apo Geothermal Complex and the Leyte-Mindanao inter-connection which would primarily tap the surplus energy generation capacity of the Leyte Geothermal complex.

The study commissioned by the World Wildlife Fund’s (WWF) Powerswitch campaign done by economist Maitet Diokno agreed with our critique of the DOE-PEP energy demand forecasting method which was based on the elasticity of aggregate economic indicators.

They computed the medium-term demand based on projected Gross Domestic Production (GDP). For its 1995-2004 medium-term energy planning, the DOE used the 9-percent projected GDP growth + 1 (elasticity) to come up with the projected increase in energy consumption.

This formula is very defective on at least two counts: 1) the 9% average GDP growth for the planning period is “overbullish;” and 2) an increase in GDP does not necessarily result in increased power consumption.

Even Ramos’ NEDA director general Dr. Cielito Habito agreed with us when we had a “Power Forum” to present our critique of the faulty DOE energy planning methodology, at Xavier University in 2004. He admitted that they tended to do “over bullish economic growth forecasting” in order to create the impression on the international community that the country has sound economic fundamentals.

And if you look at the actual economic growth rate in the 1995-2004 period, the GDP was actually just between four and six percent.

Measuring consumption patterns based on aggregate economic indicators like GDP has been very tricky. We were taught by the books and in economics classes that economic growth, as measured by GDP and GNP for example directly influences per capita consumption which in turn results in increased use of energy.

But this is not the case for export-oriented, import dependent economies like the Philippines. In fact, one economist noted that a percentage point increase in GDP actually redounds to an eight- to nine-percent increase in real poverty rate. (Gonzales, Ernesto, 2005)

In our research on actual installed generation capacity in Mindanao from 1990 to 2001, we found out that it was only in the later part of 1993 to the early part of 1994 that there was an actual shortage of power in Mindanao. This was used by President Ramos in declaring a power crisis and signing expensive IPP contracts.

Although the 200-mw Mindanao coal-fired power plant of the Steag only went on full operation in Nov. 15, 2006, the power plant was originally planned to fill in power gaps in the 1995-2004 period.

Having said this, in the last 15 years or so, no significant power generation plant entered the Mindanao Grid except the Mindanao coal-fired power plant. (Next, The need for renewable energy generation plants) MindaViews is the opinion section of MindaNews. Comments can be sent to bency.ellorin@gmail.com]


Read part 2

RP stocks firm up as mining, oil counters lead

By Doris Dumlao
Philippine Daily Inquirer
First Posted 15:10:00 09/15/2010

Filed Under: Mining and quarrying, Economy and Business and Finance, Environmental Issues, Stock Activity

MANILA, Philippines -- Local stocks firmed up on Wednesday, reversing the slim loss incurred during the previous day's profit taking, as investors remained upbeat on domestic economic and corporate prospects.
The main-share Philippine Stock Exchange index gained 5.16 points or 0.13 percent to close at 3,973.48.
The mining/oil and services counters led the day's upswing, respectively rising by 2.56 percent and 1.24 percent. The industrial and holding firms also contributed to the day's gain.
The financial and property counters, however, traded in the red.
Value turnover eased to P6.42 billion from the previous day's P9 billion.
There were 74 advancers that slightly outnumbered 64 decliners while 44 stocks were unchanged.
Analysts said the market was benefiting from stronger interest among foreign investors.
Paul Joseph Garcia, chief executive officer of the ING Investment Management, said the bear market ended, ushering in the bull market, when the index recently broke out of the 2007 highs into new all-time highs.
There's rational exuberance in the market," he said, noting that investors were buying into good corporate and domestic macroeconomic fundamentals.
With the bullish breakout, Garcia said the PSEi could hit as high as 4,700 by 2011. He added that the next two to three years would likely be good for the market.
Investors bid up shares of Philippine Long Distance Telephone Co., Energy Development Corp.,SM Investments Corp., First Gen Corp., Philippine National Bank, Philex Mining Corp.,Digital Telecommunications Philippines Inc., First Philippine Holdings Corp. and Manila Electric Co.
On the other hand, there was profit-taking on Metropolitan Bank & Trust Co., Banco de Oro Unibank Inc., Filinvest Land Inc., Megaworld Corp., Ayala Corp., Ayala Land Inc., DMCI Holdings Inc., International Container Terminal Services Inc., Metro Pacific Investments Corp., Aboitiz Power Corp. and SM Prime Holdings Inc.

Protests, opposition won’t stop operation of coal-fired power in Sarangani—DoE

By Germelina Lacorte
Inquirer Mindanao
First Posted 12:55:00 09/15/2010

Filed Under: Electricity Production & Distribution,Environmental Issues, Energy, Politics

DAVAO CITY, Philippines — Individuals and groups opposing the coal-fired power plant in Sarangani province—including Sarangani Representative Manny Pacquiao—could no longer prevent project completion and subsequent operation, an energy official said here Monday.
Edmar Derla, chief of the Department of Energy’s oilindustry management division, said the coal-fired power plant has been commissioned to supply 200 megawatts of additional power for Southern Mindanao. During a forum with Bangko Sentral ng Pilipinas (Central Bank of the Philippines) officials here, Derla responded to the worries expressed by exporters over the opposition of Pacquiao and other groups to the project.
The exporters feared that Pacquiao and other groups could stall the project.
“The project is already on commission although there is minor opposition from the Koronadal diocese, among others,” Derla said.
He assured the public that the power shortage would be eased by the subsequent operation of the coal-fired plant, now being built by Conal Holdings.
Conal Holdings is a corporation that counts the Alcantara Group, a company owned by the family of Sarangani Governor Miguel Dominguez, among itsshareholders.
Derla said the long power outages in Mindanao at the height of the El Niño had made the government cut its dependence on hydropower and pursue other forms of power generation.
“It’s understandable because Mindanao depends on 53 per cent of its total power requirements on hydropower,” he said.
Derla said even if Mindanao’s dependable power generation capacity was 1,682 megawatts against the demand of 1,241 megawatts, new power plants had to be built as soon as possible.
He said Mindanao’s power demand has been growing by 4.3 percent annually and would require an additional 660 megawatts by 2017.
“With another Hedcor plant in Compostela Valley and the Sibulan plant (in Davao del Sur) in full operation, and the opposition to the Tamugan hydroproject finally resolved, everything will be falling into place,” Derla said.

List of pending renewable energy proposals grow long

BY EUAN PAULO C. AÑONUEVO REPORTER

THE list of renewable energy contracts awaiting approval by the Department of Energy is growing long, according to the agency. In a report, Energy Secretary Jose Rene Almendras admitted there are still 382 renewable energy contracts awaiting his approval.

Of the total number, 255 projects are for hydro, 62 for wind, 23 for biomass, 21 for geothermal, 18 for ocean energy, and three for solar energy.

The Energy department has signed 205 renewable energy contracts since last year after the passage of the Renewable Energy Law in 2008.

These contracts are worth over P87.74 billion in potential investments and promise to generate 4,400 megawatts of clean and indigenous power.

This volume of electricity is more than enough to supply the present demand from the Visayas and Mindano, which are both suffering from power shortages.

Almendras said that the approval of the pending projects would depend on the resolution of “burning issues” concerning the industry.

These issues include the setting of the renewable portfolio standard, which would require distribution utilities to secure power sourced from clean and indigenous energy sources; and the feed-in-tariff rates, which would guarantee project proponents’ returns through power rates.

The Energy chief said that other renewable energy policies also have to be put in place, such as allowing consumers to choose renewable energy as their power source, as well as the sale of any excess power to the grid.

Regulators are still ironing out these policies but are expected to pass the tariff incentive scheme for renewable energy projects early next year.

PSALM Invested $2.1 Million in Lehman Brothers

By CHARISSA M. LUCI

September 13, 2010, 7:49pm

MANILA, Philippines — The Power Sector Assets and Liabilities Management Corporation (PSALM) paid $2.1 million (approximately P98.7 million) for its $300-million “Principal-Only-Swap (POS) transaction with the bankrupt Lehman Brothers Corp., Eastern Samar Rep. Ben Evardone on Monday bared.

The transaction was confirmed by PSALM officer-in-charge Maria Luz Caminero during the recent hearing of the House Committee on Appropriations.

Evardone questioned why PSALM engaged in “very risky investments” when it was using the proceeds sourced out from the sale of the National Power Corporation (Napocor) assets, which “is not the mandate of PSALM.”

Because of this development, Evardone filed a resolution calling for an investigation on how the proceeds of the privatization were spent.

“I want to make sure that the consumers will not end up paying the huge Napocor debts because I think that the proceeds of privatization are enough to pay the liabilities of Napocor,” Evardone said.

Caminero defended the move, saying it was just part of the PSALM’s “liabilities management mandate.”

“I think the EPIRA Law is very clear that all proceeds from the sale of Napocor assets should be used to pay its debts so that the liabilities of Napocor will not be shouldered by the consumers by way of increases in electricity rates,” Evardone said.

Evardone is among the lawmakers who vowed to file a resolution to block the power rate increase as well to call for an investigation into the alleged abuses committed by the PSALM, a government-owned and-controlled corporation tasked to undertake the privatization of the assets of the Napocor.

The PSALM generated $10.65 billion from the privatization of Napocor assets. In 2009, it obtained $2.2 billion loans and another P30 billion loan in 2010. However, only a total of $4 billion was used to pay the debts of Napocor.

P88B in renewable-energy contracts awaiting approval from Energy dept

Written by Paul Anthony A. Isla / Reporter

MONDAY, 13 SEPTEMBER 2010 12:31

“BURNING issues” are delaying the infusion of some P88 billion in potential investments into the country’s determined bid to promote and develop renewable-energy sources. This, according to Energy Secretary Rene Almendras, who said a total of 382 renewable-energy contracts worth P87.74 billion were still awaiting the nod of the Department of Energy (DOE). Of these pending contracts, 255 were for hydropower projects; 62 for wind; 23 for biomass; 21 for geothermal; 18 for ocean energy; and three for solar-power projects. Almendras said the contracts could result in the generation of 4,400 megawatts of clean and indigenous power, which would be more than enough to supply the current demand from the Visayas and Mindanao. The DOE has signed 205 renewable-energy contracts since last year following the enactment of the Renewable Energy Act of 2008. Almendras said the approval of the pending projects would depend on the resolution of “burning issues” that concern the renewable-energy industry, such as the setting of the “renewable portfolio standard.” This standard will require distribution utilities to secure power sourced from clean and indigenous-energy sources and feed-in-tariff rates to guarantee the project proponents’ returns through power rates. Almendras said regulators were still finalizing these policies and they were expected to pass the tariff-incentive scheme for renewable-energy projects early next year. “There are also other renewable-energy policies that have yet to be put in place, including allowing consumers to choose renewable energy as their power source and selling to the grid any excess power they generate through these sources,” Almendras said.

Renewable energy perks pushed back to next year

It may take five more months before regulators can come up with the tariff incentives for renewable energy projects, the Energy Regulatory Commission (ERC) said. Francis Saturnino Juan, ERC executive director, said the feed-in-tariff (FIT) would be completed by February next year once the National Energy Regulatory Board (NREB) submits its computations by November.


“We’re targeting three months from the submission to conduct the hearings for the setting of the FITs and come [up] with the decision,” he said.


The ERC initially set an August deadline for the NREB to release its FIT figures. The computed FIT would then determine the tariff on different renewable energy projects within a prescribed period to guarantee investors’ returns.


The NREB, however, asked the ERC to extend the deadline by another two months. Once completed, the FIT would be subject to regulatory approval.


The tariff scheme is one of the incentives given under the Renewable Energy Law to promote and encourage the development of clean and indigenous energy sources such as solar, wind, ocean, run-of-river hydroelectric power and biomass.


Under the latest draft rules issued by the ERC, consumers would have to shoulder the FIT enjoyed by renewable energy projects under a uniform charge, which is similar to the universal charge in electricity bills.


The amount collected from this tariff would then be distributed to renewable energy developers, based on their approved FIT.


The draft rules under review at the NREB would establish the incentive for each renewable energy project.
EUAN PAULO C. AÑONUEVO

9-hour power curtailment in 5 Mindanao provinces on Monday

By Malu Cadelina-Manar | Sunday| September 12, 2010 | Filed under: Energy, Top Stories

KIDAPAWAN CITY (MindaNews/11 September) – The National Grid Corporation of the Philippines (NGCP) will implement on Monday a nine-hour power curtailment in five provinces in Mindanao.

In a letter sent to electric cooperatives and power firms in Mindanao, Maximo Adiong of the NGCP Mindanao System Operations said the load curtailment is due to a scheduled shutdown of the Maramag-Kibawe 138-kilovolt transmission line.

The shutdown, Adiong added, will facilitate the stringing and tapping works, and eventually commissioning, of the new Maramag-Bunawan 230-KV transmission line.

Since transmission loading is limited to only 450 megawatts, the NGCP Mindanao has requested the power firms and cooperatives to implement voluntary load curtailment.

“This will prevent overloading of power transmission highways,” Adiong said in his letter.

The power curtailment will affect the Cotabato Electric Cooperative (Cotelco), South Cotabato Electric Cooperative (Socoteco) 1 and 2, Davao del Sur Electric Cooperative, Sultan Kudarat Electric Cooperative, Maguindanao Electric Cooperative, and the Cotabato Light and Power Company Inc., in Cotabato City.

Since Cotelco may use a loading limit of 16 megawatts on Monday, which is only 40 percent of its daily load, it will implement curtailment in its sub-stations from 9am to 5pm., according to its spokesperson Felix Canja

Cotelco has seven sub-stations in its area of coverage. Each sub-station will experience a one-hour power blackout starting 9am.

Canja has advised power consumers to be extra cautious in using alternative sources of light during blackouts as these may cause fires if left unattended. (Malu Cadelina Manar/MindaNews)

DBS, Samsung, Hyundai Engineering, Semirara Mining: Asia Ex-Japan Equity

By Berni Moestafa - Sep 8, 2010 5:34 AM GMT+0800

The following companies may have unusual price changes today in Asian trading, excluding Japan. Stock symbols are in parentheses, and share prices are from the previous close, unless noted otherwise.

Australian mining stocks: Prime Minister Julia Gillard’s government is “determined” to press ahead with its election promise to introduce a mining profit tax in Australia, Treasurer Wayne Swan said after the Labor Party won support from independent members of parliament to form a government.

BHP Billiton Ltd. (BHP AU), the world’s largest mining company, declined 0.3 percent to A$38.44. Rio Tinto Group (RIO AU), the third-biggest miner, dropped 0.9 percent to A$74.35.

Banks: Philippine bank loans, net of overnight placements with the central bank, increased 11.7 percent in July, the fastest growth since June 2009, according to the monetary authority. Banco de Oro Unibank Inc. (BDO PM), the nation’s biggest bank by assets, advanced 0.5 percent to 56.10 pesos. Metropolitan Bank & Trust Co. (MBT PM), the second-largest lender, climbed 1.5 percent to 70 pesos.

DBS Group Holdings Ltd. (DBS SP): The banking unit of Southeast Asia’s biggest lender plans to sell five-year dollar bonds at a spread of between 100 to 105 basis points more than similar maturity Treasuries, according to a person familiar with the matter. DBS Group gained 0.1 percent to S$14.26.

Hyundai Engineering & Construction Co. (000720 KS): The company’s creditors plan to sell their stake in South Korea’s largest builder for as much as 20 percent more than its market value, an official at one of the debt holders said. Hyundai Engineering fell 1.4 percent to 65,300 won.

Samsung Electronics Co. (005930 KS): The world’s largest television manufacturer said an oversupply of chips in 2011 is likely if personal-computer demand slows further, according to Nikkei English News. Samsung Electronics rose 1 percent to 788,000 won.

Semirara Mining Corp.(SCC PM): The Philippine coal producer’s 12-month share-price estimate was raised 50 percent to 150 pesos by Deutsche Bank AG analyst Klyne Resullar on valuations and higher earnings forecasts. “Semirara continues to look attractive,” said Resullar, who kept a “buy” rating on the shares. The stock fell 0.5 percent to 125.50 pesos.

Swire Pacific Ltd. (19 HK): The Hong Kong office landlord said its units have agreed to sell the stakes they hold in Crown Beverage Cans Hong Kong Ltd. and Crown Swire Investment Co. to Crown Packaging Investment (H.K.) Ltd. for $150 million, according to a statement to the Hong Kong stock exchange. Swire fell 0.2 percent to HK$98.50.

To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net

Coal-ash regulation pushed

Written by William Fisher / Inter Press Service

SATURDAY, 04 SEPTEMBER 2010 09:39

NEW YORK—In what promises to be a contentious, high-profile series of debates, the forces of environmental protection will be lining up against those of the electric-power industry over the future status of coal ash. Environmentalists are urging the US Environmental Protection Agency (EPA) to regulate toxic ash from coal-fired power plants as a hazardous waste. Industry spokespeople are claiming that Federal enforcement of coal-ash disposal rules would mean classifying the waste as hazardous, adding costs and making it harder to recycle some of the waste. Erich Pica of the advocacy group Friends of the Earth told an EPA panel that the catastrophic 5.4 million cubic yard coal-ash spill at the Tennessee Valley Authority’s Kingston Fossil Plant in December 2008 was a graphic reminder that there are no federally enforceable standards for coal ash. “It’s time the EPA begin to regulate coal ash as a toxic pollutant,” Pica said at a public hearing. The EPA is considering adopting the first-ever federal standards for the disposal of coal ash. Opponents of that position are pushing for coal ash to be regulated as a nonhazardous material with enforcement remaining in the hands of individual states. Environmental groups say the states have failed to protect the public and that the EPA should set a national standard and enforce it. Monday’s hearing, held in Alexandria, Virginia, on the proposed federal rules was the first of seven that will be held across the country over the next month. Scott Schlesinger of the Natural Resources Defense Council (NRDC), an environmental group, one of Monday’s witnesses, wrote in his blog: “What happens to the toxics that utilities remove from their stacks that used to pollute our skies? They now pollute our waters. During the past 30 years, the pollutants that used to go up the stack are now collected in ash. Administrations have been prodded by NRDC lawsuits to regulate these toxic wastes and have found excuses not to do so.” He added, “Now, with new technology that better predicts the high levels of these toxics reaching groundwater, EPA has come forward with a plan to regulate coal ash and its metal components of arsenic, mercury, lead, antimony and other toxic metals.” A study released last week reveals that 39 sites in 21 states where coal-fired power plants dump their coal ash are contaminating water with toxic metals, such as arsenic and other pollutants. The study reports that the problem is more extensive than previously estimated. The report shows that, even contained, stored ash can have led to water contamination and negative health impacts. The electric-power industry is lobbying to keep regulation up to individual states. But Jeff Stant of the Environmental Integrity Project, director of the new study, contends, “This is a huge and very real public-health issue for Americans. Coal ash is putting drinking water around these sites at risk.” Most states don’t require monitoring of drinking water near the waste sites. The study found five sites where monitoring figures were available, and all of them had some contamination. In four, tests showed problems at one or more drinking-water wells. In Joliet, Illinois, where the information was too limited for analysis, at least 18 nearby wells were closed because of boron contamination, the report said. The US burns more than 1 billion tons of coal a year to generate about half of the nation’s electricity. It ends up with at least 125 million tons of coal waste, including ash and the sludge left from scrubbers that remove air pollutants. The report from the environmental groups said more than a third of the reused coal ash is for structural fill or to fill up empty mines. The report said those uses could result in water contamination. The report, by the Environmental Integrity Project, Earthjustice and the Sierra Club, documents 39 additional coal-ash dumpsites in 21 states that are contaminating drinking water or surface water with arsenic and other heavy metals. Experts from those groups found that, at every one of the coal-ash dumpsites equipped with groundwater monitoring wells, concentrations of heavy metals, such as arsenic or lead, exceeded federal health-based standards for drinking water—with concentrations at the Hatfield’s Ferry site in Pennsylvania reaching as high as 341 times the federal standard for arsenic. This new report comes after a February 2010 report by Environmental Integrity and Earthjustice that documented water contamination from 31 coal-ash dumpsites in 14 states. The report documents 39 additional coal-ash dumpsites in 21 states that are contaminating drinking water or surface water with arsenic and other heavy metals. It also adds to the nearly 70 other sites previously identified by the EPA. Lisa Evans, senior administrative counsel at Earthjustice, said: “There is no greater reason for coal-ash regulation than preventing the poisoning of our water. We now have 39 more good reasons for a national coal-ash rule. The mounting number of contaminated sites demonstrates that the states are unable or unwilling to solve this problem.” Environmental groups want to see the Obama administration EPA take a more aggressive stance, and choose to more closely regulate coal ash as a hazardous waste. Jeff Stant, director of the Environmental Integrity Project’s Coal Combustion Waste Initiative, said: “The contamination of water supplies, threats to people and damage to the environment documented in this report illustrate very real and dangerous harms that are prohibited by federal law but are going on in a largely unchecked fashion at today’s coal-ash dumpsites. Contamination of the environment and water supplies with toxic levels of arsenic, lead and other chemicals is a pervasive reality at America’s coal-ash disposal sites because states are not preventing it.”