The Market Monitor Minding the Nation's Business
Riza Lozada
The Senate panel looking into the proposed special powers Malacanang is seeking to address the feared electricity-supply shortage in Luzon has recommended the junking of the Palace request, and proposed instead the interruptible load program (ILP), which has proved adequate in stabilizing supply in the country’s other major regions.
Sen. Sergio Osmeña III, chairman of the Senate Committee on Energy, said the ILP would be applied in Luzon as a temporary measure from March to May, the so-called summer months when power consumption peaks or “whenever they (shortages) occur.”
Osmeña said President Aquino “is being misled” in seeking emergency powers. “He (Mr. Aquino) does not really know power, so he relies on people who don’t know power, either,” Osmeña said, in a strongly worded closing statement terminating panel deliberations on the Palace request.
Osmeña said the ILP has been applied in Mindanao and Cebu since 2010, and proved to be a potent mechanism during months of power supply shortages.
The Department of Energy (DoE) had earlier said it expected a shortage of 782 megawatts in the coming months, citing the potential ill-effects of El Nino and the scheduled Malampaya plant
maintenance shutdown.
The ILP could amply cover the shortage as Osmeña’s panel expects the program to deliver a supply of 1,600 megawatts (MW).
“Believe me, we will have 1,600 megawatts. If we do not have 1,600
megawatts, that’s already beyond the control of the Senate, it’s up to God,” Osmeña said.
Among those currently applying the ILP is the Cagayan Electric and Power Company (Cepalco). According to its executive vice president, Ralph Paguio, Cepalco received from the Energy Regulatory Commission (ERC) last year an approval on the compensation scheme for companies participating in ERC’s ILP program.
“Without the ILP, we would have started having rotating power interruptions in March,” Paguio was quoted in a news report as saying.
Malacanang is not giving up the fight, however. As recently as Thursday, Communications Secretary Herminio Coloma Jr. defended the emergency powers the President wants Congress to grant him as being necessary to deal with a possible power crisis.
Coloma said the Palace remained hopeful that Congress would grant Mr. Aquino the request. He also assured the public the DoE is working to avert the power shortage, yet the only scheme the agency has lined up as a solution is also the ILP.
Peak demand for the Luzon grid during the “summer months” could reach 9,000 MW. The Grid Code mandates a reserve level of about 1,650 MW to cover fluctuations in supply and scheduled maintenance or when breakdowns of plants happen.
Osmeña said he believes the dependable capacity would be 10,700 MW but the reserve level would not be enough, and should be addressed by the ILP.
Osmeña also said he is not in favor of the DoE proposal to lease 300 MW in generating sets at a cost of P6 billion for two years or P10 million per megawatt per year, which would part of the emergency power package being sought by Mr. Aquino.
He said the use of ILP would mean a huge difference in cost per kilowatt-hour (KWH) compared to the proposal to lease generator sets or gensets. The latter proposal would cost consumers around P35 per KWH including leasing fees, mobilization, demobilization, operations and maintenance and diesel fuel costs compared with the ILP, which would cost the consumer only about P7 to P8 per KWH, or a difference of P27-28 per KWH.
“The Luzon grid has around 3,100 MW of private gensets. Your committee proposes to reduce the demand on the Luzon grid by asking the owners of those gensets to de-load from the grid and to use their own gensets,” he said.
“In this manner, up to 1,400 MW may be de-loaded for a few hours (peaking) on certain days. The self-gen users would be refunded for the cost of diesel (around P14/KWH) and what they would have paid their utility (about P6/ KWH),” he said.
Osmeña said implementing the ILP would also enable production from hydro and gas plants to be tweaked.
“For example, the Caliraya-Botocan-Kalayaan (CBK) pump storage facility has been unable to deliver anywhere close to its 750-MW installed capacity owing to lower than optimum levels of water in Lake Caliraya. With the efforts of the state firm National Power Corp. (Napocor) and economist Peter Wallace, a slight increase in water level of one-half meter would afford CBK to supply an additional 120 MW during peak hours,” he said.
He said if the 1,200-MW-capacity natural gas plant in Ilijan (Batangas)—which is required to use biodiesel as alternative fuel—would be exempt from the Biofuels Law when the Shell Philippines Exploration (SPEX) Malampaya Gas facility is under maintenance (up to 30 days every three years), Ilijan would be able to deliver 160-MW using pure diesel.
Osmeña said the proposal is the subject of another bill that the energy committee is set to file to augment electricity supply.
The committee recommended that the government reimburse the private sector and Napocor-Power Sector Assets and Liabilities Management (PSALM) for certain extraordinary expenses such as keeping whole certain Peza locators such as Texas Instruments and Hanjin, which had been guaranteed by a previous administration lower than the normal grid rates.