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October 24, 2014

BUSINESSMIRROR ONLINE: 22 firms agree to run standby generators in summer of 2015

AT least 22 corporations have agreed to self-generate their power needs in the summer months of 2015, if necessary, to help lessen the Luzon grid’s demand for electricity amid extremely tight supply next year, a lawmaker said on Sunday.

House Deputy Minority Leader and Liquefied Petroleum Gas Marketers’ Association (LPGMA) Rep. Arnel Ty identified the 22 firms as Ayala Land Inc., ABC Development Corp. (TV5), Alphaland Development Inc., Citystate Center Condominium Corp., Feature Realty Holdings & Development Corp. (Bay City Mall), Makati Sky Plaza Inc., Manta Equities Inc. (NAC Tower), Megaworld Corp., Ortigas & Co., and Philippine Long Distance Telephone Co.

Ty said those who agreed to run their standby generators in summer are 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), The 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,” Ty said.

Ty said some 126 megawatts (MW) of electricity normally consumed by the 22 firms may be freed and available for small shops and homes without any independent or reserve generating capacity.

“We are urging other large consumers of electricity—establishments with loads of at least 1 MW each—to follow the example set by the 22 firms and participate in the Interruptible Load Program [ILP],” Ty said.

The Department of Energy has warned that the supply deficit for Luzon could reach up to 900 MW next year due to the onset of mild El Niño. Based on established protocols, ILP is implemented during a red-alert status (minimal power reserve) upon the notice of the National Grid Corp. of the Philippines and the distribution utilityies informing ILP participants to deload from the grid.

The ILP is a voluntary program whereby businesses such as malls and factories that have their own generators can be disconnected from the power grid in times of short supply, and can sell any excess power they generate to distributors.

Last month President Aquino has asked Congress to grant him an emergency power that will allow him to contract additional power capacity to avert the looming power crisis in summer next year. The President cited the Section 71 of the Electric Power Industry Reform Act, which states that, “Upon determination by the President of the Philippines of an imminent shortage of the supply of electricity, Congress may authorize, through a joint resolution, the establishment of additional generating capacity.”

Moreover, Ty said that on Monday, Congress is expected to tackle Malacañang’s request for emergency powers to address Luzon’s projected power shortage next summer, estimated at up to 900 MW.

Once Congress endorses the installation of the extra generating capacity, the DOE  intends to enter into an emergency lease agreement with a foreign supplier for the delivery of some P6 billion worth of diesel-fired modular generators.

Ty previously warned that the government’s plan to rent and operate new generators “could be prone to corruption.”

He said the selection of the suppliers of the new generators plus the fuel needed to run them may be susceptible to fraud under a “crisis situation” wherein procurement standards may be disregarded.

The Philippine Chamber of Commerce and Industry (PCCI) has also insisted that privately held reserve generators are capable of producing an aggregate of 1,800 MW to 2,000 MW of electricity, which is more than adequate to cover the anticipated 900-MW supply deficit.

Both LPGMA and the PCCI favor the adoption of the ILP to fully cover the power shortage, as the program will cause the least increase in electricity rates.

They warned that the deployment of additional generators to be leased and run by the state-run Power Sector Assets and Liabilities Management Corp. could lead to an add-on electricity charge that is at least double the surcharge that may be passed on to consumers under the ILP.

Earlier, Liberal Party Rep. Reynaldo Umali of Oriental Mindoro, chairman of the House Committee on Energy, said the lower chamber will pass the joint

resolution, which allows President Aquino to secure additional generating capacity to solve the looming crisis in summer next year, on October 29.

Umali, also the co-chairman of the Joint Congressional Power Commission, however, admitted that the lower chamber is still undecided on how best to solve the supply deficit next year.

Umali said they are still considering all of their options such as the ILP, purchasing of generators sets at P9 billion and rental of generating sets at P6 billion.

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