22 firms to run own generators

MANILA, Philippines - Twenty-two private companies have agreed to run their own generators to ease the projected electricity shortage in Luzon between March and June next year, a lawmaker said yesterday.

Deputy Minority Leader Arnel Ty, who represents party-list group Liquefied Petroleum Gas Marketers Association, said the 22 firms have informed the Department of Energy (DOE) of their intention to participate in the government’s interruptible load program (ILP).

He said the program seeks to encourage business establishments, particularly malls and big factories, to run their own generators during the summer months of next year instead of sourcing their supply from the Luzon grid.

Ty said wider participation in the ILP from the private sector would help prevent rotating blackouts.

Ty identified the 22 initial ILP participants as Ayala Land, ABC Development Corp. (TV 5), Alphaland Development Inc., Citystate Centre Condominium Corp., Feature Realty Holdings & Development Corp. (Bay City Mall), Makati Sky Plaza Inc., Manta Equities Inc. (NAC Tower), Megaworld Corp., Ortigas & Co., Philippine Long Distance Telephone Co.; Power Concessionaires Inc. (EGI Rufino Plaza), Raffles Condominium Corp., Robinsons Land Corp., Rustan’s Supercenters Inc., Seda Hotel-Bonifacio Global City, Shangri-La Plaza Corp., SM Prime Holdings Inc., Sunstar Mall (Laguna), JMT Condominium Corp., The Prestige Tower, Waltermart Malls, and Xin Tian Ti Development Corp. (Marco Polo Ortigas).

“These entities have, on their own accord, decided to operate their standby generators, if required, instead of drawing their electricity supplies from the Luzon power grid, between February and June 2015,” said Ty, a member of the House energy committee.

As a result, some 126 megawatts (MW) of electricity normally consumed by these firms would be available for small shops and homes without any independent or reserve generating capacity, he said.

“We are urging other large consumers of electricity – establishments with loads of at least one MW each – to follow the example set by the 22 firms and participate in ILP,” Ty said.

President Aquino has invoked the emergency provisions of the Electric Power Industry Reform Act of 2001 and has asked Congress for special authority to rent or buy generators from foreign suppliers.

The energy committee of the House of Representatives convenes today to tackle the President’s request for emergency powers from Congress.

The committee, chaired by Mindoro Oriental Rep. Reynaldo Umali, will discuss a draft resolution approving the presidential request but giving him options on how to address the forecast shortage.

Options

The options include tapping the standby generating capacity of malls and other big establishments. The capacity, according to the Energy Regulatory Commission, is about 3,000 MW – more than enough to fill the shortfall estimated by Energy Secretary Jericho Petilla at a maximum of 800 MW.

Ty, on the other hand, said the plan to buy or rent generators is open to corruption.

The DOE has estimated that 100 megawatts of additional generating capacity would cost P1 billion. Up to 600 MW costing P6 billion is needed to fill next year’s forecast shortfall.

If the generators would be leased, the minimum contract period is two years, and total capacity would have to be paid for, whether it is actually used or not. The total cost would come up to P12 billion.

Several lawmakers and business groups, including the Philippine Chamber Commerce and Industry (PCCI), have insisted that privately held reserve generators are capable of producing 1,800 to 2,000 MW of electricity, which is more than adequate to cover the anticipated supply deficit, which, according to Petilla, would range from 300 MW to 800 MW.

While the DOE is projecting a deficit, the National Grid Corp. of the Philippines (NGCP), which operates the country’s power transmission facilities, has forecast sufficient supply and even a “gross system reserve.”

Hour-long blackouts

Petilla claims that if the projected shortage is not solved, there would be rotating blackouts in Luzon, including Metro Manila, from at least an hour from March to June next year.

Aquino sent his letter-request to Speaker Feliciano Belmonte Jr. and Senate President Franklin Drilon last Sept. 12.

Specifically, the President wanted special authority to undertake “a specific, focused and targeted acquisition of additional power generating capacities for use during the limited periods of very tight energy supply.”

“This authority is needed in order to address the imminent shortage of electric power for the summer of 2015 in Luzon,” he said.

Petilla is proposing that Congress authorize the President to buy or rent generators from foreign suppliers. The lease option could cost taxpayers up to P12 billion for 600 MW, or P1 billion for every 100 MW for a minimum contract period of two years.

Petilla stressed electricity consumers in Luzon will have to brace for power outages of at least one hour in the summer of 2015 if the grid relies solely on the ILP to address the looming power crunch.

Petilla is still counting on the approval of special powers from Congress to allow the government to tap additional capacity, said there would be the so-called transition blackouts under the current protocol of the ILP.

“If we run on ILP, I can guarantee you there will be brownouts but these will not be severe,” he said.

There are at least seven to eight weeks of projected red alert status for the Luzon grid in different weeks starting in the last week of March up to end-May, according to data from the NGCP.

Citing data from NGCP, Petilla said during a Senate hearing last month that the red alert status for the summer of 2015 will start in the last week of March, with projected net reserves of only 113 MW and will last until May.

There will also be red alerts in the first and second weeks of April with net reserves at 308 MW and 377 MW, respectively and in all four weeks of May with projected net reserves at 55 MW, 139 MW, 219 MW and 201 MW, respectively.

Petilla stressed there would be the so-called transition blackouts under the current protocol of the ILP, which is based on red alert.

Under the ILP, big power users with large generating capacities will be asked to use their own power to ease demand from the grid and will be compensated for it.

He said running the ILP, under the current protocol, which is based on red alert, would take at least an hour for participants to sync their generator sets to the grid.

“How long do you think they will turn on their generator sets to provide, for example 300 megawatts? There will be at least one hour transition blackout,” Petilla said.

The situation can improve if the protocol on running the ILP starts when there is a yellow alert instead of a red alert.

But this, according to Petilla, would cost more.

“If we run it on yellow alert, the price impact will be higher because they will be consuming more. And you need more participants because not all of them will run everyday,” he said.

At the same time, if there is a higher number of participants, the ILP can be called upon when there is a yellow alert instead of waiting for a red alert.

A red alert means a severe power deficiency while a yellow alert means reserves are below the minimum set by the regulator. Yellow alert is reached when the total reserve is less than the capacity of the largest plant on line. For the Luzon grid, this is usually equivalent to 647 MW, or one unit of the Sual Power Plant.

‘System gross reserve’

On the other hand, the House committee headed by Umali has received conflicting data from the energy department and the NGCP on the power supply situation in Luzon during next year’s summer, prompting Umali to ask the two to reconcile their figures.

Isabela Rep. Rodolfo Albano III, one of the minority bloc’s representatives in the energy committee, said the NGCP report shows that there would be sufficient supply in Luzon for the whole of next year, including for the months of March to June, the period Petilla has forecast a shortage.

The report shows that available power for Luzon for next year would range from 8,839 megawatts in January to 10,946 MW in December, while peak demand would be from 7,760 MW in January to 8,410 MW next December.

There would be a “system gross reserve” ranging from 666 MW in May, which is the lowest, to 2,764 MW in December, the highest.

Reserve in March, April and June is forecast at 717, 766 and 997 MW, respectively.

There is no showing in the report of a shortfall for any month. The report already took into consideration the effects of the extended El Niño dry season phenomenon and “FOs” or forced outages of power plants scheduled to go on maintenance shutdowns.

NGCP is the entity that runs the country’s power transmission facilities on a 25-year lease. The Chinese government owns it to the tune of 40 percent, with 60 percent belonging to Filipino investors.

Over the weekend, a group calling itself People Opposed to unWarranted Electricity Rates (POWER) opposed Aquino’s request for special authority to buy or rent generators from foreign suppliers.

“The problem with Malacañang’s proposal to allow the President to enter into P6-P12 billion worth of negotiated power contracts is that it is based on Energy Secretary Petilla’s mere insistence of a power shortage that is not supported by verifiable data,” the group said in a statement.

Citing data from the Philippine Independent Power Producers Association (PIPPA), the group said there is a dependable generation capacity of 11,667 MW in the Luzon grid.– With Iris Gonzales