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By Francis Allan L. Angelo

 

IT’S not good enough.

 

This was the reaction of an electric cooperative executive to the decision to let SPC Power Corp. operate Panay Diesel Power Plant (PDPP) in Dingle, Iloilo with subsidy from the government.

 

Engr. Wilfred Billena, Iloilo Electric Cooperative (Ileco) 1 general manager, said the problem brought about by the privatization of PDPP brings to fore the need to put up a baseload power plant in Panay.

 

Malacañang decided Wednesday to continue with the turnover of PDDP to SPC March 26.

 

SPC will own the plant and sell power to the three electric cooperatives in Iloilo provided the National Power Corp. (Napocor) and Power Sector Assets and Liabilities Management Corp. (Psalm) will subsidize the Singaporean firm’s operations, a mockery of the government’s privatization thrust.

 

Napocor will provide fuel to PDPP to keep it running and provide power to the cooperatives.

 

The new arrangement will allow electric cooperatives to enjoy the same subsidized rate of P2.80 per kilowatt-hour which Napocor is currently offering.

 

Psalm and Napocor sold PDPP along with the Bohol Diesel Power Plant to SPC for more than US$5 million.

 

The privatization of the plant raised public concerns that it will stop running because of rehabilitation works and the issue on the real cost of power.

 

“We cannot continue like this. We have to have our own power plant in Panay so we will not scrounge for sources when we lose capacities in the grid. This the reason why we continue to contract power from independent power producers to secure our future energy needs,” Billena said.

 

Atty. Dennis Ventilacion, Ileco-2 director, said Napocor has no choice but to join in the said arrangement with SPC because the state-owned power firm has contractual obligations with the electric cooperatives in Panay.

 

Ventilacion also stressed on the need to put up new baseload plants to prevent the same problems that cropped up with PDPP’s privatization.

 

“This is the reason why the infrastructure development committee of the Regional Development Council called for the immediate construction of new power plants but from the looks of it, these projects will not be online by January 2011,” Ventilacion said.

 

Even the Visayas Supply Augmentation Auction (VSAA) program mulled by the Department of Energy to arrest the acute power shortage in Panay is also a temporary solution to the problem.

 

Billena said there is a need to improve the capacity of the submarine cable between Negros and Panay Islands to make VSAA more effective.

 

VSAA aims to tap embedded power generators in Visayas and excess capacities of power plants in Visayas.

 

“We have constraints in the submarine cable and uprating is needed to ensure stable supply. And Panay would still be at the mercy of other power producers as regards the price and stability. These plants will have to decide between making money and maintaining the backup for their franchise areas,” Billena said.

 

Global Business Power Corp. (GBPC) and DM Consunji Inc. (DMCI) are proposing two coal-fired power plants in Panay.

 

GBPC, which belongs to the Metrobank Group, has begun earthworks at its plant site in Brgy. Ingore, LaPaz, Iloilo City. GBPC operates Panay Power Corp., the sole power distributor in Iloilo City. DMCI has yet to begin construction of its plant in Concepcion, Iloilo because of uncertainty over its potential market.

By Francis Allan L. Angelo

 

WILL the Visayas Supply Augmentation Auction (VSAA) program mulled by energy agencies curb the acute power shortage in Panay Island?

 

The VSAA is the only solution presented by the Department of Energy (DoE) to Ilonggo officials who riled at the agency’s failure to look for stable sources of electricity what with the continuing growth in demand of the island and privatization of National Power Corp. (NPC) assets.

 

The implementation of VSAA was directed pursuant to DoE’s Department Circular No. DC 2009-01-001 dated January 16, 2009. The circular ordered “DOE attached agencies, all electric power industry, participants, consumers and various stakeholders to adapt and implement contingency measures to ensure adequate and reliable electric power supply in Visayas Grid particularly in the islands of Cebu, Negros and Panay.”

 

VSAA was an offshoot of the DoE-led energy summit at the Cebu Waterfront Hotel January 14-16.

 

The summit confirmed the shortage of reserved electricity in the Cebu-Negros-Panay (CNP) power grid.

 

As of December 17, 2008, 7pm, Panay Island lacks 53 megawatts (MW) while Negros is short by 57MW.

 

Panay is suffering from rotating brownouts ranging from 30 minutes to 9 hours. Negros needs 240MW by 2010 on top of its present capacity of 109MW.

 

Cebu province lacks 291MW with Mactan Island accounting for about 65MW while the power deficit in Bohol reached 38.70MW.

 

The Leyte-Samar enjoys a 352.70MW surplus but it is not enough to fill in the 439.7MW total power deficit of Visayas region.

 

WHAT IS VSAA?

 

The VSAA will be administered by the Philippine Electricity Market Corp. (PEMC).

 

Eric Niño Louis, PEMC training officer, said VSAA is a day-ahead market which would allow embedded generators to sell their un-contracted capacity and grid-connected customers to sell an interruptible portion of their loads through an auction process.

 

The VSAA is a form of demand-management as it would allow participants to manage their loads as well as to run their self-generation facilities, as means to ease the supply deficit and augment supply in the region, Louis added.

 

The embedded plants, which include generators of private businesses, should register with PEMC before they can participate in the auction.

 

The VSAA is expected to provide relief to electricity consumers in the Visayas region from rolling blackouts due to supply deficits within the region.

 

Even with cost recovery, the economic impact of the VSAA is seen to be positive as business and commercial establishments benefit from clean, uninterrupted and reliable electricity supply.

 

This increase in economic activity can spur new jobs, products and services – offsetting any effect of a marginal increase in electricity prices, when looked at the overall socio-economic perspective.

 

The Energy Regulatory Commission (ERC) will establish and enforce the pricing mechanisms of the auction. It will also act on recovery and return on demand-side management projects.   

 

Due to the financial incentive to supply into the region, it is hoped that companies would then be encouraged to maintain their generating capacities at an optimum level, thereby decreasing occurrences of forced outages.

 

Louis said they have identified 110 power generation units embedded in Visayas area, mostly diesel-fired generators.

 

But the PEMC has yet to determine the capacity of the said generators pending their registration with VSAA.

 

“Once the interested generators register, we will determine their capacity,” Louis said.

 

Under the VSAA, power generators who sacrificed their own supply to fill in the deficiency of the region will be compensated to recover cost of plant operation or load interruption.

 

The acute power problems of Visayas, particularly Panay, took a worse turn with the looming takeover of NPC plants in Dingle, Iloilo and Bohol Island.

 

SPC Power Corp., which bought the Dingle and Bohol facilities for more than US$5 million, has yet to categorically assure that it will run the plants after the March 26 turnover.

 

Electric cooperatives in Iloilo are riling at the privatization of the Dingle plant as SPC might not run the facility if cooperatives don’t agree with the true cost of power which is more expensive than NPC’s subsidized rates.

 

The Regional Development Council’s infrastructure development committee headed by Iloilo City Mayor Jerry Treñas has issued a resolution asking President Gloria Arroyo to defer the turnover of the Dingle plant to SPC.

 

CHALLENGES

 

The current power supply situation in Visayas “is at a critical level as the current levels of electric power supply in the Visayas grid is inadequate to meet the demand in the region,” the VSAA primer said.

 

In the Power Development Plan (PDP) of the Philippine Department of Energy (DOE) showing the supply-demand outlook for 2006-2014, it is reported that Visayas electricity demand requirements should be addressed immediately to prevent power outages in the Cebu, Negros and Panay islands.

 

The consumers in these regions are presently suffering from looming power shortage during peak hours resulting in increasing incidents of outages until sufficient new base-load capacity is put online.

 

Energy officials already declared the Visayas grid to be in a status of “red alert” indicating that the current available capacity is inadequate to meet both demand and reserve requirements.   

 

New generation plants that will operate in the Visayas are expected to be operational by the years 2010 and 2011.

 

The development of generation capacity, however, is hampered by prevailing regulated electricity rates that are below the cost of production for most generators. In the absence of transparency in the true cost of power, private sector generators are not encouraged to operate nor invest in new capacities.

 

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