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Power supply outlook tight but there’s nothing to worry about, says DOE

Posted On 2014 Apr 19
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Energy Secretary Carlos Jericho Petilla (2nd right) led the launching of the pilot demonstration on the use of 4% esterified waste vegetable oil as alternative transport fuel in partnership with Jollibee Foods Corporation, SeaOil and the United States Agency for International Development (USAID). Also in photo (from right) are PCIERD division chief Engr. Albert G.Marino; Rolf Anderson, chief of USAID's Office of Environment Energy and Climate Change; Jollibee Foods Corporation VP John Victor Tence; and Seaoil Philippines president and CEO Francis Glenn Yu. Inset photo shows Sec. Petilla shaking hands with Mr. Anderson after his speech on Tuesday (March 5, 2013) at the Seda Hotel in Bonifacio Global City, Taguig City. (MNS photo)

Energy Secretary Carlos Jericho Petilla (2nd right) led the launching of the pilot demonstration on the use of 4% esterified waste vegetable oil as alternative transport fuel in partnership with Jollibee Foods Corporation, SeaOil and the United States Agency for International Development (USAID). Also in photo (from right) are PCIERD division chief Engr. Albert G.Marino; Rolf Anderson, chief of USAID’s Office of Environment Energy and Climate Change; Jollibee Foods Corporation VP John Victor Tence; and Seaoil Philippines president and CEO Francis Glenn Yu. Inset photo shows Sec. Petilla shaking hands with Mr. Anderson after his speech on Tuesday (March 5, 2013) at the Seda Hotel in Bonifacio Global City, Taguig City. (MNS photo)

MANILA (Mabuhay) — Combined efforts have been put in place to ensure that the country will not suffer, especially during the tight power supply in the summer months, according to the Department of Energy (DOE).

Energy Secretary Carlos Jericho Petilla said the government continues to encourage the private sector to engage in the power sector because “the only way that prices can stabilize is if we have a little bit of oversupply.”

“We cannot have plenty of oversupply because no one would put up a power plant anymore. A little bit of oversupply or ample supply is what we need,” he said.

Measures for the summer months alone include asking some power plants to postpone a bit their scheduled maintenance shutdown, for power plants to contract their supply instead of getting their supply from the wholesale electricity spot market (WESM) and implementation of the interruptible Load Program (ILP).

Under this program, private companies that have power generators need not tap electric distribution utilities (DUs) for their need but instead use their own facilities.

In turn, they will be paid by the DUs based on the fuel and oil used in running their own generators and on the depreciation of the equipment.

Petilla said they expect this program to provide an additional capacity of at least 500 megawatts.

He stressed that he cannot guarantee that power rates during the summer months will not spike but said any increases would not be exuberant like what happened when the Malampaya oil project at offshore Palawan went on maintenance shutdown in the last two months of 2013.

He said the problem on electricity prices going up is an issue for those tapping the spot market, which he pointed out, remains to be market-driven.

“Prices are market-driven. Sometimes we expect prices to go up because of tight supply but bids remain low,” he said.

Petilla stressed that tapping the spot market should be optional for distribution utilities (DUs) like the Manila Electric Company (Meralco).

He said DUs should contract their supply at least one year ahead to ensure that they would be able to have enough capacity for their customers.

“It’s the strategy of (power) cooperatives and distribution utilities to actually expose themselves to WESM or to contract themselves,” he said.

The DOE said there are some days during this year’s summer months that power supply is in yellow alert as supply is very tight due to large demand and maintenance shutdown of some power plants.

Petilla said contingency reserve for the Luzon grid is normally at 600 MW but it was down to 250-300 MW lately because of the summer heat.

Among the power plants on planned maintenance shutdown and would not be operating at maximum capacity this month are the GN Power 1, Sta. Rita 1, Makban 1, Magat 1, and Calaca.

In May, Unit 2 of Angat power plant will also be on maintenance shutdown although there is no definite time yet when it will be back on normal operations.

Those that are on forced outage this month are Pagbilao 2, Tiwi 2, Masinloc 2, Malaya 1, Limay 2, Sta. Rita 4, Angat mini hydro Unit 3, Makban 5, and Bacman 2.

Petilla, however, said the public need not be worried because the DOE and the National Grid Corporation of the Philippines (NGCP) are monitoring the situation.

“I would not want to cause any panic at this point. We’re monitoring it and we’re making sure that we remain, at the most, on Yellow Alert and inventorying all the resources that we have and make sure that they come back right away,” he said.

The Energy chief said that if the situation worsens, the ILP will be implemented.

In a related development, lawyer Phillip C. Adviento. manager of the Training and Communications Group of Philippine Electricity Market Corporation (PEMC), said they cannot touch on the prices in the spot market even if PEMC is the market operator.

“We let market forces dictate the price. What we can do is check for violation of WESM rules and submit the result of investigation to the PEMC Board for penalties,” he said.

It can be recalled that electricity prices shot up last November to December on what the Energy Regulatory Commission (ERC) traced to market failure after some power plants went on unscheduled power shutdown and violated the must-offer rule (MOR).

Under MOR, power generators are required to declare and offer their respective maximum capacities in the spot market to prevent them from withholding capacities, which in turn can result to shooting up of electricity prices.

PEMC data showed that before the scheduled maintenance shutdown of the Malampaya platform, average demand from Nov. 4-10, 2013 was about 5,999 MW.

During the shutdown, average demand rose to 6,197 MW from Nov. 11-17 and from November 18-24, but declined slightly to 6,129 MW from Nov. 25-Dec. 1, and 6,011 MW from Dec. 2-8.

After the shutdown, demand from Dec. 9-15 rose to 6,288 MW but went down to 6,101 MW from Dec. 16-22.

Based on the initial findings of the ERC, a total of 2,035.13 MW were not offered during the Malampaya shutdown.

Bulk of these were withheld by hydroelectric power plants at 925.29 MW; oil-fired power plants, 608.9 MW; coal-fired power plants, 252.77 MW; natural gas-fired power plants, 173.1 MW; and geothermal-fired power plants, 75.07 MW.

During that time, generation charge jumped exponentially but the ERC later voided the increase because it did not reflect the correct prices.(MNS)

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