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November 12, 2014

BUSINESSMIRROR: Solon asks PSE-listed companies to run generators when Luzon power supply becomes critical in 2015

AS the House of Representatives focuses on the Interruptible Load Program (ILP) in addressing the projected power-supply deficit, a lawmaker has asked the 263 corporations listed at the Philippine Stock Exchange (PSE) to offer to run their standby generators in the event that Luzon’s power supply becomes critically low in the summer of 2015.

House Deputy Minority Leader and Liquefied Petroleum Gas Marketers’ Association Rep. Arnel Ty said power saved by these corporations may be utilized by other consumers amid the threat of the shortage.

“We are appealing to all PSE-listed firms to join the Interruptible Load Program,” Ty said.

The lawmaker said the PSE groups some of the Philippines’s largest business concerns with the best corporate social responsibility reputations. He said seven PSE-listed firms – Ayala Land Inc., GMA Network Inc., Megaworld Corp., Philippine Long Distance Telephone Co., Robinsons Land Corp. and SM Prime Holdings Inc. – have already signed up for the ILP.

Ty said Federal Land Inc.’s office skyscraper GT International Tower has also enlisted in the ILP. Federal Land is a wholly owned subsidiary  of PSE-listed GT Capital Holdings Inc.

He said Posh Properties Development Co., a unit of PSE-listed Anchor Land Holdings Inc., has also joined the ILP, along with Shangri-La Plaza Corp., an affiliate of PSE-listed Shang Properties Inc. Based on established protocols, ILP is implemented during a red-alert status (minimal power reserve) upon the notice if the National Grid Corp. of the Philippines (NGCP) and the distribution utilities 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.

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. Moreover, the lawmaker said that currently a total of 29 firms, including those not listed at the PSE, have, so far, enrolled in the ILP, and are ready to drive their backup generators. Businesses are encouraged to sign up for the ILP until December 1 to qualify for reimbursement from the government for fuel expenses and other costs.

“We applaud these entities for going out of their way to shield consumers, by helping to minimize the threat of potential power brownouts in Luzon between February to June next year,” Ty said, who speaks for the minority block in the House energy committee.

Should all 29 firms run their own generators, Ty said some 169 megawatts (MW) may be freed and available for consumption by smaller businesses and homes.

He said the risk of outages will be highest next summer, when demand peaks due to the extreme heat, while supply becomes fragile owing to reduced water pressure at hydropower facilities.

Earlier the Department of Energy said Luzon needs some 600 MW to 900 MW of reserves by the summer of 2015 to ensure the stable supply of electricity throughout the grid. President Aquino has already asked Congress to pass a joint resolution granting him emergency powers to contract the required additional generating capacity.

Liberal Party Rep. Reynaldo Umali of Oriental Mindoro, chairman of the House Committee on Energy and also the co-chairman of the Joint Congressional Power Commission, said the lower chamber will likely approve by December 1 a joint resolution enabling government to establish the extra-generating capacity via a stronger ILP.

Umali said a highly responsive ILP would make it possible for government to fully harness the reserves available from the standby generators already held by private firms. He said there are already 891 MW committed ILP with a de-rated or usable capacity of 623 MW as of last week.

The Philippine Chamber of Commerce and Industry estimates that privately owned backup generators could supply up to 2,000 MW.

Ty also said, “The ILP has emerged as the preferred coping strategy simply because the reserves are already there, and also because it affords consumers the best protection against the hazard of excessive increases in electricity rates.”

The draft of the House resolution, authorizing the president to establish additional generating capacity to effectively address the projected electricity shortage in 2015, said the Department of Energy projects a critical power shortage estimated at 700 MW to occur in March to July 2015 consisting of 14 weeks yellow alert and two weeks of red alert for a total of 16 weeks of approximately one hour of brownouts for one day per week. Provision and procurement of additional generation capacity shall be available on or before March 1, 2015 and the additional generating capacity shall be preferentially sourced from the ILP.

The resolution added that the adoption and execution of Energy and Conservation measures shall pursued as a further fallback mechanism.

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