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November 11, 2014

BUSINESSMIRROR ONLINE: Acquisition of gensets stricken off

Due to lack of support from Congress, the Department of Energy (DOE) has reportedly abandoned its plan to acquire or lease generator sets (gensets) to deal with the projected power-supply deficit in the summer months of 2015.

This, House Deputy Minority Leader and Party-list Rep. Arnel Ty of Liquefied Petroleum Gas Marketers’ Association said, is because both administration and opposition lawmakers had attacked the plan as “vulnerable to corruption.”

Malacañang previously invoked the emergency provisions of the Electric Power Industry Reform Act of 2001 to allow the government to establish the required additional generating capacity under such terms and conditions as Congress may authorize via a joint resolution.

“We presume the gensets and the fuel supplies will be acquired under emergency conditions. Thus, all existing policies and rules meant to ensure the integrity and fairness of the procurement process may be put aside,” he said.

Also, Liberal Party Rep. Reynaldo Umali of Oriental Mindoro, chairman of the House Committee on Energy and co-chairman of the Joint Congressional Power Commission (JCPC), said the leasing option is no longer being pursued under President Aquino’s emergency powers.

“[However] we have to make sure the ILP [Interruptible Load Program] succeeds…so we will continue monitoring how much additional capacity is coming in on a weekly basis just to make sure we will hit the 700-megawatt (MW) projected [shortfall],” he said.

“I gave him [Energy Secretary Carlos Jericho L. Petilla] the draft of resolution, which that [power to lease or acquire gensets] not included. From our discussion he is already amenable to the [House] draft resolution but he is still studying it,” Umali said.

According to the draft resolution on emergency powers, the House of Representatives wants the government to use the committed ILP in addressing the looming power shortage next year. But a draft of the resolution submitted by the DOE to the Senate seeks to grant the President an authority to negotiate contracts for the acquisition of additional generation capacity either via lease or purchase.

Based on the draft of the House resolution authorizing the President to establish additional generating capacity to effectively address the projected electricity shortage in 2015, the DOE projects a critical power shortage estimated at 700 MW to occur in March to July 2015, consisting of 14 weeks of yellow alert and two weeks of red alert. This means a total of 16 weeks of approximately one-hour brownouts daily.

Umali also said Congress will now likely just focus on recommending a measure that will enable government to fully harness the reserve supplies of electricity available from the standby generators already held by private firms.

Umali said their data showed there are already 891 MW that have been committed to the ILP, with a de-rated or usable capacity of 623 MW.

Based on established protocols, the ILP will be implemented during a red-alert status (minimal power reserve) upon the notice of the National Grid Corp. of the Philippines (NGCP), with the distribution utilities (DUs) informing ILP participants to deload from the grid.

The ILP is a voluntary program where 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.

Through the ILP, the aggregate demand for power from the system will be reduced to a more manageable level, helping ensure the availability of supply during the summer season.

Umali also vowed to approve the committee report for emergency powers when Congress resumes session on November 17.

Revision of ILP rules

THE Energy Regulatory Commission (ERC) said it will seek more ILP participants to draw in additional capacity needed by the country.

To achieve this, the ERC wants to amend the ILP rules, which, at present, cover only the DUs. 

In a notice, the ERC is soliciting comments from industry stake-holders on a plan to amend the ILP rules. It has scheduled on November 26 a public consultation to discuss the draft “Rules to Amend Resolution 8, Series of 2013, otherwise known as the Rules to Govern the Interruptible Load Program of DUs.”

In the draft, the commission wants the NGCP to be included in the program that currently covers only DUs. The ERC said the expansion of ILP’s coverage will help address imminent power shortage and augment the limited power requirements of any grid in the country.

The rules are meant to establish a process for the ILP of DUs and the NGCP for its directly connected customers. “These rules shall apply to all DUs and their respective participating captive customer within their franchise area, to all DUs that entered into a tripartite ILP agreement with a retail electricity supplier (RES) and its participating contestable customers, and the NGCP that entered into an ILP agreement with a participating directly connected customer,” stated the draft amended ILP rules.

Under the ILP, the DU and its customer shall enter into an agreement wherein the latter may be requested to de-load for a period of time as determined by the DU.

The ERC, in its draft rules, wants the ILP to be implemented for the contestable customers under a tripartite agreement to be executed among the DU, RES and the participating contestable customer. For directly connected customers, the ILP shall be administered by the NGCP through an ILP agreement.

The NGCP shall pay the participating customer an amount representing the incremental cost incurred due to the full or partial de-loading.

The ERC also wants the NGCP to submit a monthly report on its ILP implementation, containing details of its calculations of the de-loading compensation.

The ERC said the draft amended rules are also meant to “ensure the timely compensation and recovery of allowable expenses…protect the public interest as it is affected by the rates and services of the DUs and NGCP, ensure transparent and reasonable prices of electric power service, and help maintain the security, reliability and quality of the supply of electric power.”

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