VSAA gets go-signal from ERC

CEBU, Philippines - The Energy Regulatory Commission provisionally authorized the Department of Energy through the Philippine Electricity Market Corp. to execute the necessary preparatory steps towards implementation of its proposed Visayas Supply Augmentation Auction scheme.

ERC chairwoman Zenaida Cruz-Ducut said with the approval PEMC may now proceed to register qualified customers willing to be disconnected from the grid at certain times, especially during peak hours of the day when there is electricity shortage, and generation companies, which have available or uncontracted capacity to generate power during these periods.

ERC issued this order last April 22, 2009 just a few weeks after it conducted a public hearing here in Cebu which was spearheaded by DOE Secretary Angelo Reyes.

Under the proposed VSAA, these qualified customers willing to be disconnected from the grid, or what is known as interruptible load, and these generation companies that will be asked to run their plants during periods of shortage, and thereby augment the supply of electricity for the system, will be paid for being interrupted (for the interruptible load) or for the power they will generate (for the generation companies).

The amount to be paid to them is determined based on the offers they will make to the VSAA administrator, which is PEMC.

 PEMC then will come out with a merit order list as to which load or plants will be prioritized in providing the service, based on which offers are cheapest.

The VSAA is a demand-side management measure as it would allow power players participants to manage their loads as well as to run their self-generation facilities as a means to ease the supply deficit and augment supply in the region.

It will operate as a day-ahead market which would allow generators to sell their un-contracted capacity and customers to sell an interruptible portion of their load through an auction process.

ERC further explained that whatever payments made to these VSAA participants will be shared as additional generation cost of the participating distribution utilities, which in turn will pass this on to their respective end-users.

According to the DOE that with this scheme, the supply shortage problem in the Visayas will be addressed since capacity will be freed or made available for the system or will be added (in the case of generation companies).

ERC however said that participation in the scheme is purely voluntary, as the interruptible load connected to distribution utilities can only participate through their respective distribution utilities.

The ERC decided to allow the conduct of the preparatory acts for the implementation of the scheme, particularly, the registration of these participants as they recognized the urgency of the supply problem in the Visayas.

Ducut said that ERC is committed to expedite the evaluation and, if warranted, the approval and implementation, of any proposed workable solution to the supply problem in the Visayas. — Mitchelle L. Palaubsanon/BRP (THE FREEMAN)