Special powers for Noy within the month

MANILA, Philippines - Congress aims to give President Aquino special powers within the month to resolve a looming electricity shortage next year.

House of Representatives committee on energy chairman Reynaldo Umali said over the weekend that the Senate and House are working together to deliver the emergency powers to Aquino as soon as possible.

“Since the President wants to fast-track the solution, we need to pass this within November,” he said.

The Oriental Mindoro lawmaker said Senate energy committee chairman Sergio Osmeña III is willing to support the joint resolution.

“We are running out of time,” he said. “There are tax perks, such as VAT (value added tax)-exemption, that need to be granted to Interruptible Load Program (ILP) participants that would require legislation. But we do not have time for that anymore. That is the reason why the President should be granted special powers.”

Last Friday, the House committee on energy filed the joint resolution granting Aquino special powers to tap additional capacity for the summer of 2015.

Speaker Feliciano Belmonte Jr. is the resolution’s principal author.

Joint Resolution 21 authorizes Aquino to provide for the establishment of additional power-generating capacity as mandated by Republic Act 9136, the Electric Power Industry Reform Act (EPIRA), to effectively address the projected shortage of the supply of electricity in the Luzon grid from March to July 2015.

“Additional generating capacity shall be sourced from the Interruptible Load Program, fast-tracking of committed projects, and plants for interconnection and rehabilitation,” read the resolution.

The ILP is a program where big power users will be asked to run their own generators when demand is high instead of getting their supply from the Luzon grid.

Electricity that would not be taken from the grid would be available to households and other users, sparing them from rotating blackouts.

The cost of running the generators of big power users would be exempted from value-added tax.

Big power users with their self-generating capacities have until Dec. 31 to sign up for the program. Those failing to sign up on or before the deadline would not be compensated even if they run their own generators during the summer months.

Umali said the ILP’s success would largely depend on the cooperation of malls, factories and other private establishments in running their own generators.

“Big power users will be asked to use their own power for two to three hours for five days a week to ease demand from the grid,” he said.

Companies participating in the ILP would be compensated 7.5 centavos per kilowatt-hour, he added.

The resolution is based on the premise that the Luzon grid would have a maximum projected shortage of 1,004 megawatts or 600 MW of the required dispatchable reserves and 404 MW of required contingency reserves.

Dispatchable reserves are offline plants that can be turned on when power supply falls while the contingency reserve is equivalent to the highest online power plant.

The resolution mandates the Department of Energy (DOE) to formulate the implementing rules within 30 days upon its approval.

Energy Secretary Carlos Jericho Petilla said the DOE could immediately craft the implementing rules and regulations (IRR) upon approval of the resolution.

“That won’t take a long time,” he said. “We can work on the IRR fast. We can even start drafting the rules already.”

However, the DOE would have to wait for the final wording of the resolution, he added.

El Niño

Meanwhile, Isabela Rep. Rodolfo Albano lll said yesterday the early onset of the El Niño will compel heavy power users like shopping malls, office buildings and industrial plants with power-generating capacity to join the ILP to prevent power outages next year.

“The El Niño threat aggravates the projected power supply situation in the country next year caused by thin power reserves that could lead to power outages,” he said.

Albano, one of the minority bloc’s representatives in the House energy committee, made the statement after the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) announced that El Niño conditions could be felt as early as within the next two months and could last until May 2015.

However, weather agencies in the Asia-Pacific region expect the extended dry season event to weaken, as warm Pacific waters are calming down, PAGASA added.

PAGASA said hot conditions would not be as severe as earlier forecast.

Water in several dams in Luzon used both for power generation and irrigation is at normal levels, PAGASA added.

Albano said the government must be prepared for whatever impact El Niño would have on power supply.

“I strongly urge the private sector to join hands with the government and participate in the ILP program to help achieve the additional generating capacity needed to avert the projected power supply shortage in the summer of 2015,” he said.

Liquefied Petroleum Gas Marketers Association Rep. Arnel Ty said the standby generating capacity of 3,000 megawatts of private companies could be considered the country’s strategic energy reserves.

“We are looking at ILP as an enduring mechanism that could serve as the people’s electricity supplier of last resort during shortages caused by calamities such as earthquakes and typhoons,” he said.

“Although ILP is voluntary in nature, Congress and the Energy Regulatory Commission may still find ways to establish the program as a stable, secondary reserve mechanism. If necessary, we may provide some financial incentives to participants,” Ty added.

He said Aboitiz Power pioneered ILP in the country.

“Aboitiz Power’s distribution utility in Cebu, the Visayan Electric Co. (VECO), introduced ILP in 2009, when the Visayas reeled from brownouts due to the failure of power producers to keep up with the surge in demand,” he said.

Ty said VECO’s ILP covered 43 percent of supply shortfall in December 2013, when the Visayas suffered blackouts due to Super Typhoon Yolanda.

Although the DOE is insisting that a power shortage would occur in Luzon next year, data from the National Grid Corp. of the Philippines (NGCP) show otherwise, he added.

Quoting a report from NGCP, Ty said electricity supply in Luzon as of last month stood at 9,003 MW.

Peak demand was 6,149 MW or a reserve of 2,854 MW, he added.

Supply in the Visayas was reported at 1,415 MW against peak demand of 1,374 MW, for a reserve of 41 MW.

Mindanao had 1,213 MW in available supply, versus peak demand of 1,285 MW, or a shortfall of 72 MW.

Gas plant

Petilla said Marubeni Corp., Japan’s fifth largest sogo shosha or trading company, has offered to put up a 200-megawatt natural gas plant to help the Philippines augment its critical supply situation next summer.

“Marubeni wants to put up a merchant plant at no cost to the government but on condition that they be given a good price for the gas because they will have to pipe it,” he said.

However, the Japanese integrated business giant wants assurance that it would be able to secure the government’s banked gas at a good price.

The banked gas is unused natural gas owned by the government and is stored at the Malampaya natural gas field in offshore Palawan.

Petilla said the government could only offer the 150 MW to 200 MW banked gas owned by the government through the Philippine National Oil Co. Exploration Corp. (PNOC-EC) through a competitive bidding.

“I can’t give them the banked gas as it has to be bid out,” he said. “Otherwise I might go to jail for it.”

Marubeni could offer to buy the banked gas of Shell Philippines Exploration B.V., operator of the Malampaya gas facility, also estimated at 150 MW to 200 MW, Petilla said.

Marubeni Corp. and Tokyo Electric Power Corp. of Japan are partners in TeaM Energy Philippines, the joint venture that operates the 735-MW Pagbilao coal plant in Quezon and the 1,218 MW Sual coal plant in Pangasi-nan.