Post-Pulangi IV Rehab: What Now?

The National Grid Corporation of the Philippines (NGCP), operator of the three main power grids of the country has declared in its website a negative 197 mw (-197 mw) system reserve for the Mindanao grid, this even after the huge 255 mw – Pulangi Hydroelectric Plant is back on stream last April 8, 2012. After all the hype about the full rehabilitation of Pulangi IV HEP, it appears that it did not change the power outlook for Mindanao. For how else could you possibly explain this? The National Power Corporation (NPC) has declared that Pulangi HEP can now generate its rated capacity of 255 mw during peak hours and together with NPC’s other power plants, including its IPPs, NPC can supply the Mindanao grid almost 1200 mw. Yet, NGCP in its website has declared only 1079 mw as system capacity. With a peak forecast demand of 1276, the Mindanao grid is short of 197 mw. These figures however raise more questions than answers.

First, when NGCP declares a system peak requirement of 1276 mw, does this already include the required 100 mw of contingency reserve? Is the 1276 mw the peak energy requirement of the grid or is already inclusive of the 100 mw contingency reserve? This is important because a declaration of load deficiency of 197 mw spells doom to consumers as this will result to a corresponding curtailment of the EC’s/DU’s contracted demand, forcing them to maximize its nomination of its TMI contract which will in turn cause our electric power bills to skyrocket!

It is my view that the 100 mw contingency reserve should not be factored in the determination of system peak requirement. It is just a reserve capacity that NGCP is mandated to secure by the Grid Code and does not actually represent as an energy requirement of the grid. Now, on the assumption that the 100 mw is included in the declaration of 1276 peak system requirement and we in fact take that away, total peak requirement will only be 1176, with a shortfall of only 97 mw. With lesser shortfall comes lesser TMI and therefore lesser cost!

Second, it is now high time to look into the nomination of NPC’s hydroelectric plants. Sources from NPC are saying that its power plants, including IPPs, can actually generate 1190 mw, enough to supply its contracted demand of 1186 mw and is also more than enough to supply the 1176 system peak requirement, assuming we take away the 100 mw contingency reserve requirement.  And so, we ask:  how much really of NPC’s 1190 declared capacity is actually dispatched, considering that NGCP is saying that system capacity is only 1079 mw? Is NPC over-stating its capacity? Is NGCP not dispatching enough of NPC’s declared capacity? These are the questions that I think the government and its regulators should look into. It would also be wise for electric power consumers and CSOs to work in concert and lobby for transparency. This is so because if NPC’s declared capacity is not maximized, then we are wasting millions of pesos worth of untapped capacity that simply goes down the drain, cascading down to the mouth of Agus river by way of unwanted spillage of water from NPC’s dams. And if not actually used, shouldn’t someone pay for the lost opportunity worth tens of millions per month? Simply look at the huge variance between NPCs declared capacity of 1190 mw and NGCP’s declared system capacity of 1079 mw.  In term of its monetary value, how much is 111 mw lost opportunity per day?

Third, we already know that with Pulangi IV HEP back on the grid, the government’s generating capability will almost equal only its contracted demand. Unfortunately, the contracted demand does not actually address the total energy requirement of the ECs/DUs. Meaning, despite Pulangi IV’s rehabilitation, the electric cooperative’s actual demand is still un-answered to the tune of about 30% forcing it to nominate TMI. In the end, we consumers will still have to pay for the added cost from TMI’s expensive capacity; and woe to the ECs/DUs which do not have additional contracted capacity, e.g. ILPI.

In the case of ILPI which does not have any contract with TMI, it had not declared rotating brown-outs yet due to the assigned allocation from Treasure Steel. But when the assignment is done after one month, where will ILPI get additional capacity? When will its contracted MEGC capacity come on the stream?

Beg Iligan, beg.

When all else is said and done, it is still business as usual for the traditional electric power industry players, while, we, the consumers, bleed blood. Indignant. 

Demystifying Iligan City’s Power Shortage Part 2

I have already written about the irony of Iligan City’s continuing power shortage. I would not have wanted to dwell on this again, yet the seeming indifference of the city’s power distributor and the apparent inaction of the city’s political leadership is quite troubling.

It must be stressed that Iligan is home to Agus 5 (54mw), Agus 6 (200mw) and Agus 7 (55mw) hydroelectric power plants. These power plants have a combined rated capacity of 309 mw. The city also hosts Iligan Diesel Power Plant with a rated capacity of at least 100 mw. Despite being host to more than 400 mw of generation capacity, Iligan Light and Power, Inc. (ILPI) was only able to contract with PSALM, owner of these power plants,15.5 mw for the month of April. Granted, these generating assets may only have 200 mw of dependable capacity, excluding IDPP, but for PSALM to give only 15.5 mw to the city’s consumers smack of arrogance and lack of a sense of fairness. On the other hand, ILPI should have insisted on getting more than what PSALM is willing to give considering Iligan City’s peculiar circumstances. I am not sure about how ILPI reacted to the 15.5 mw. Suffice it to say that the city has a peak power requirement of at least 37 mw. In other words, under normal conditions, ILPI is suppose to power the city from 6pm to 9pm, when the demand is at its peak of 37 mw, with only 15.5 mw! And worst, we are not under normal conditions. With a system deficiency of at least 240 mw, PSALM, through NPC, and NGCP implemented a load to maintain scheme, further reducing ILPI’s contracted demand to about 13.2 mw. This is the reason why Iligan City almost grinds to a halt from 6pm to 10pm, with almost half of the city centers in total darkness. Not only that, there are even rotating brown-outs during off-peak hours from 10am to 6pm. What has become to the city known for its number of enchantingly cascading waterfalls? Unless ILPI will be able to get another reprieve from industrial users which are suspending utilization of their respective allocation or until such time that Iligan City will be able to successfully assert its non-monetary benefit of 25% power allocation during power crisis as per the mandate of RA 7638 and its IRR and ER 1-94, rotating brown-outs will become the order of the day until MEGC, ILPI’s chosen generator, will be able to start its operations. As to when will MEGC start its commercial operations, we do not know.

Given the current situation, it is now high time that Iligan City, through its political leaders, make a strong lobby with the DOE, PSALM and NPC for the 25% priority load dispatch pursuant to the IRR of RA 7638 and Section 6(a)2 of the Energy Regulations No. 1-94, as amended. Pursuant to these laws, the host community is entitled to prioritization in load dispatch of up to 25% of the generating asset’s contracted supply or capacity, whichever is lower. Assuming for the sake of argument that Agus 5, 6, and 7 have a combined dependable generation capacity of 200 mw, then Iligan City, their host, should have a priority in load dispatch of up to 50 mw, good enough to supply the city’s peak requirement. PSALM and NPC cannot do away with this requirement. In fact, the Office of the Solicitor General had already rendered its opinion that this is still a subsisting and enforceable benefit that can be enjoyed by the host community. The question however is: did the city and its officials make a strong lobby to enforce what the law provides? Writing letters to PSALM and NPC will not suffice! Sending SP resolutions to P-noy is not enough. This is not the solution he wanted. Remember, he wanted us to pay more! Instead, go to the streets. Create a noise. LOL But seriously, concerted actions must be done. The people of the city are tired already. They are fed up with what appears to be a half-hearted effort on the part of our city officials. 

Indubitably, the grant of the 25% load prioritization is two-pronged. It will immediately solve Iligan’s rotating brown-outs and secondly, the city’s consumers will continue to enjoy cheap and dependable supply of electricity. Cheap because our source will always be hydro at the generation mix rate of 2.98 per kwh. Cheap because we will force ILPI to rescind its contract with MEGC where we are suppose to pay P2/kwh more for 15 years! We will go to the ERC and demand that the provisional authority its previously approved be recalled. Dependable because with a combined capacity of these power plants, Iligan’s peak requirement can always be addressed.

 

 

How Could You, Mr. President?

P-noy was very recently quoted as having announced his willingness to hold dialogues with Mindanao electric power consumers and stakeholders. This he said after he was lambasted for his un-sympathetic and nonchalant attitude towards the proposals put forward by Mindanao electric power industry stakeholders. Indeed, his proposal to force Mindanao consumers to accept increased electric power bills as the only solution to the present power crisis is not only callous but bordering to the ignorant. Now he is saying that he is willing to hold dialogues. But lest we forget, that Mindanao Power Summit in Davao City last April 13 was supposed to be a dialogue. It was meant to be a healthy interaction between the present political leadership and its constituents. Of course, while the Summit failed to convince P-noy to take a different view of the situation, it nonetheless created an avenue for the various stakeholders to come out with their own perspectives on how to effectively address the crisis, P-noy’s indifference notwithstanding. Kudos to the brave women and men who stood up to the mighty wealth of influence of the power industry players!

Mr. President, should you really want to hold genuine and healthy dialogues with the Mindanao electric power stakeholders, please come with an open mind. Please hold the dialogue sans the blinders created by your friends in the electric power industry. Additionally, get your facts right. For how could you say that it is no longer sustainable to operate Agus and Pulangi Hydroelectric Power Complexes when this earned for the government an average net annual income of P8 Billion the last 5 years? How could you possibly highlight the need to pursue the last stages of the implementation of the EPIRA by privatizing these power plant complexes when history tells you that the law itself failed to reduce electric rates and had in fact caused power rates to skyrocket to the high heavens? Yet, you bully the people to accept the “reality” and pay higher power bills? We thought you said that one of the mandates of your EPIRA (GMA’s EPIRA) is to reduce power rates. LOL! BTW, it is no longer funny for us, Mindanao electric power consumers.

Mindanao Power Summit 2012: A Summit Gone Wrong!

The Mindanao Power Summit in Davao City yesterday started with a big bang but ended with a whimper, a thud! When it was first announced, Mindanao consumers felt elated and indeed enthusiasm ran high for at least, the government seemed serious about solving the current power crisis. But that was before P-Noy gave his piece. With P-Noy playing the role of a spoiler, the Mindanao Power Summit was a complete waste of time, efforts and resources. As it turned out, P-Noy did not schedule the summit in order to listen to what the various stakeholders have to say about the problems and the proposed solutions. He scheduled the summit in order to trumpet the twisted vision of R.A. 9136, the EPIRA, and bully the stakeholders into paying more for the skyrocketing cost of electricity.

Zamboanga City Rep. Climaco was all business when she laid down the basic Mindanao Power Agenda. As the House of Representatives Deputy Speaker for Mindanao, she took it upon herself to outline what she believes to be the long term solutions to the problem, including among others, the creation of a Mindanao Power Company which shall take ownership over Agus and Pulangi Hydroelectric Power Plant Complexes and continued participation of the government in maintaining a steady, yet affordable, supply of electricity in the entire island of Mindanao. The idea then is to allow the people of Mindanao to have a vital say in ensuring power supply is always available at a truly reasonable and affordable price with the two (2) remaining government-owned power plant complexes playing the role of stabilizing market prices. The proposal sounds reasonable. In the hands of the government, the power generated by these power plants will be distributed pro-rate to the various ECs, DUs and industrial users at a rate approved by the ERC. These ECs, DUs and IUs will then source out additional capacity from private generators, with the latter competing for the residual market needs.

P-Noy however cannot be persuaded. It turned out that he, P-Noy, is a staunch advocate of privatizing the power industry as envisioned by EPIRA. He wanted to see to it that the remaining government-owned power complexes, the Agus and Pulangi, be sold to private companies. All along, we thought that P-Noy does not want to have anything to do with any GMA-espoused advocacy. If you can recall, R.A. 9136 was passed and signed into law by GMA in 2001 amidst issues of millions of payola being doled out to legislators. Of course, one can reasonably suspect that there must be something wrong with the EPIRA for why would it required millions of payola as a condition for its passage into law? Yet, P-Noy sees nothing wrong with the EPIRA.  Or is he wearing some blinders that he is oblivious to the laws inherent pitfalls? Or perhaps the political donors who have been salivating at the sight of Agus and Pulangi have played into the mind of the President forming his policy on the matter. We can only speculate. That’s right. But previously, P-Noy said we are his Boss! One can still vividly recall when during his inaugural speech, P-Noy proudly acknowledged the Filipino people as his Boss. But this was not meant to be, at least during the Mindanao Power Summit. P-Noy did not listen to his Boss. In fact, P-Noy insulted his Boss in Mindanao. Proposals from his Bosses were clearly outlined to him. There was almost unanimity in the belief that the government should take an active part in power generation by not selling Agus and Pulangi. This was the view prevailing during the summit with the exception of some private companies which have looked at the 2 power plant complexes as their future cash cow. But again, P-Noy cannot be persuaded. He had already made up his mind. Or perhaps, big industry players have already made up his mind! Listening to P-Noy during the summit was akin to listening to somebody from the private generation companies hailing EPIRA as the ultimate solution to soaring electricity prices. Indeed, that really is very ironic! Because truth be told, the cost of electricity almost doubled after EPIRA! But is it not what P-Noy would like us to do? Pay more?

Here lies the ultimate irony. Just like what DOE Sec. Almendras has been saying, P-Noy is telling us if you need more electricity, you pay more. You do not want rotating brown-outs, you pay more. You want more private investors to put up power plants, you should be willing to pay more. You want a stable supply of electricity in Mindanao, let private companies run Agus and Pulangi. When all else is said, it is clear that the government is washing its hands. It had shirked from its duty to protect the interest of the ordinary consumers. While private companies are reaping huge profits from the power industry at the expense of the helpless consumers, the government sits idly, noynoying!

The Painful Saga of Minda(rk)nao

Without let-up, Mindanao continues to suffer rotating brown-outs, along with the inconvenience and business losses these power outages bring. It really is a pity since this problem is not unknown to the present government of P-Noy when he took the reins of power almost two (2) years ago. This administration could not entirely wash its hands saying that this problem preceded it. To say that this problem existed even during the administration of GMA completely glosses-over the fact that this present administration did not lift a finger to prevent this problem from occurring again. It must be recalled that as recently as April 2010, Mindanao was again plunged to almost total darkness when the government’s hydroelectric power plants, source to almost 50% of Mindanao’s power requirement, could not be fully utilized due to receding water levels in Lake Lanao and the Pulangi Dam in Marawi City and Bukidnon, respectively. Of course, this happened before P-Noy took his oath of office and while DOE Sec. Almendras was still in the private sector. But to do nothing to solve this problem after they took their office is entirely different thing. To fail or refuse to face head-on the problem and provide short-term and long-term solutions before the problem crops up again is borders to ineptitude and callousness! Almost two (2) years had passed, yet the government failed to come up with viable solutions. It is not the government failed to anticipate this problem; the thing is it failed to seriously address the issue until Mindanao is again troubled by rotating brown-outs.

P-noy was recently quoted as having mentioned dredging the Pulangi Dam in Bukidnon and Agus River in Lanao del Norte and upgrading the ageing Agus VI hydroelectric plant as solutions to the problem. Lest we forget, that dam in Bukidnon has already been dredged and nothing has come out of it. In fact, this month of April, that power plant in Maramag, Bukidnon will have total shutdown depriving again the Mindanao Grid of another 200 mw of capacity. At present, Mindanao electric power consumers are experiencing 3 to 4 hours of rotating brown-outs, expect that this will escalate to 6 hours per day in the month of April. Dredging of the Agus River is also another smokescreen. National Power Corporation (NAPOCOR) has repeatedly made presentations to NEDA about its plan to dredge the river. This plan was already on the table as early as the late 1980s. More than 20 years after planning to dredge Agus river, the government and NAPOCOR are still telling us that they intend to do the dredging without concrete efforts to show. The uprating of Agus VI suffers from similar fate. This was floated about five years ago yet until now, there is a dearth of activity to show that the government is serious in pursuing these undertakings.

Admittedly, private investors are currently constructing new power plants in Mindanao. This will augur well to the strategic stability of the power conditions in Mindanao. These new power plants are however projected to go online in 2014, a good two (2) years from now. Now we ask, what will happen to the current power shortage? Between now and 2014, what is the government proposing to do to take Mindanao out from the quagmire? Undertaking dredging activities and uprating Agus VI cannot be done overnight. Government bidding requirements and other bureaucratic delays will certainly extend these undertakings to more than one year or even beyond that!

The government mentioned the alleged power untapped capacities in Mindanao. Perhaps it is referring to the two (2) power barges it previously sold to Therma Marine. We had it from good sources that Therma Marine had already entered into bilateral contracts with electric cooperatives (ECs) and distribution utilities (DUs) for the supply of electricity. In most cases however, these ECs and DUs do not nominate their contracted capacity with Therma Marine due to its prohibitive costs. This refusal on the part of these ECs and DUs to nominate Therma Marine is not because they will suffer huge losses. They do not actually incur losses since what these ECs and DUs will pay to Therma Marine, they collect from their consumers. Electric power industry is a “pass-on” industry. All industry players are protected, except the consumers! Power generators, power transmission business (NGCP), power distributors and cooperatives are protected from all forms of market un-predictabilities and business losses. No one in the power industry losses a single centavo, except again the power consumers. Thus, in the instances that the ECs and DUs refused to nominate Therma Marine, while this will result to brown-outs, this will however protect the consumers from paying its high cost. Indeed, there is a difference between what they pay to NAPOCOR (2.98/kwh) and THerma Marine (9.46/kwh in the average).

Sadly, the government is now forcing these ECs and DUs to draw capacities from their contracts with Therma Marine. In other words, the government is forcing the consumers to shoulder the added cost of electricity brought about by these bilateral contracts with Therma Marine. When this happens, consumers will be paying P2/kwh more. Indeed, the government has completely abdicated its obligation to protect the consumers. Some consumers are will to pay more just to prevent these pestering brown-outs but are also calling on the government to do its share. We consumers are willing to sacrifice, no doubt about that. But is the government willing to let go of the VAT on electricity? As an urgent measure, we require these ECs and DUs to nominate their contracted capacity with Therma Marine and consumers will pay more. But in order to ease the burden of paying for the added cost, the government should suspend the imposition of the VAT on electricity. Let us be fair to the Mindanao consumers. Stop bleeding Mindanao consumers!

Assuming that these ECs and DUs will tap Therma Marine’s capacity, will this completely ease the problem before 2014? But really, when will the rotating brown-outs stop?

Mindanao: (Com)Promised Land!

There is an interesting piece of news in a national daily quoting DOE Secretary Almendras’ perceived solution to the critical power situation in Mindanao. 

According to Almendras, the rotating brownouts lasting one or two hours daily were primarily due to the shortage of supply and the electric cooperatives’ decision not to purchase available electricity from fuel-fired power facilities.

Almendras added that the Department of Energy (DOE) would soon issue an order mandating electric cooperatives to contract and purchase the necessary capacities within their respective areas.http://www.philstar.com/Article.aspx?articleId=785902&publicationSubCategoryId=63

I am wondering if this was always the plan of the DOE. All along, the people of Mindanao were made to believe that appropriate solutions are being put in place. It must be recalled that in the summer of 2010, Mindanao was again plagued by recurring rotating brown-outs. The solution then was to contract Therma Marine’s (TMI) just-purchased power barges for it to provide ancillary services the cost of which was passed-on to consumers. Indeed, NGCP’s Ancillary Service Purchase Agreement (ASPA) with TMI provided temporary relief to the brown-outs at the cost of an additional P0.90/kwh. With the ASPA and the concomitant added cost, we in Mindanao soon forgot about the problem, except that we silently absorbed the added cost. We thought all along that the problem was solved. But we were wrong!

The ASPA between TMI and NGCP expired last month and it appears that TMI does not want to renew the agreement. Apparently, TMI does not only want to be paid the lower cost of providing ancillary services. For why get P0.90/kwh when you can get a staggering P9/kwh, more or less after getting contracts with DUs and ECs for supply of energy. In other words, TMI, a private generation company, would rather supply power to the grid than being used as ancillary provider. This is a sound business policy and no one can fault TMI for this. In fact, it appears that this is what the DOE would want DUs and ECs to do. Buy additional capacity from private generators to complement the deficiency of what the government, through PSALM and NPC and their IPPs, can provide. But here lies the irony.

Lest we forget, the government still owns four (4) power barges, one (1) is moored in Davao City and the other three (3) in the Visayas. This current power shortage in Mindanao was already known to the DOE five (5) ago. I know it is not easy to find mooring sites and the time needed to put up these sites. But the thing is, the government could have towed these power barges to Mindanao two (2) years ago, when in the summer of 2010, Mindanao was plunged to darkness. In other words, had the government wanted to provide additional capacity, it could have done so easily. While it may be true that the cost of energy generated by these diesel-guzzling barges is prohibitive, the government could have explored ways of mitigating the impact of higher costs. I believe it is more to the interest of the consumers  if the government included these generation mix and cause slight increases in the current grid rate pegged at P2.98/kwh. What I am saying is that the government could have brought these barges to Mindanao earlier, go to ERC and apply for appropriate increase due to changes in generation mix, rather than completely yielding control and influence to private generators. In Iligan for instance, with ILPI contracting MEGC for additional capacity, consumers are expected to shell-out additional P2.23/kwh. Surely, a change in generation mix with these barges around will not result to more than P2 increase! But unfortunately, the government takes a different view of our situation. Instead of getting an active part in stabilizing power cost and availability in Mindanao, it completely abdicated this responsibility and sacrificed public interest and the welfare of power consumers in the altars of private profit. Anyways, it happens only in Mindanao. Ouuuch!

Indeed, there is truism to Mindanao being a Land of Promise.  It has become a land promised to be handed-over to private capital. (Com)promised!  

Demystifying Iligan’s Power Shortage

Iligan City is nestled at the northwest of the Island of Mindanao and is home to the famed Maria Cristina Falls and several other cascading water falls. It is also where one can swim to to the cold and clear waters of Timoga  spring pools. Indeed, Iligan City is truly blessed with abundant supply of waters made possible since Agus river, the sole outlet of Lake Lanao in Lanao del Sur, snakes down and cascades to Maria Cristina Falls in Fuentes, Iligan City. The city is equally fortunate to host three (3) of the six (6) Agus Hydroelectric plants. I am referring to Agus 5, 6 and 7. These three (3) power plants have a combined rated capacity of 309 MW. One can really expect that with abundant sources of electricity, Iligan City is insulated from the current power shortage which continued to hound Mindanao. Sadly, this is far from being true!

The people of Iligan are suffering from 2 to 3 hours of rotating brown-outs. At any given peak hour, that is from  5:30 to 10pm, a huge chunk of the city is taken-off the grid and is reduced to total darkness, except perhaps for the flickering candle lights and chargeable emergency lamps that light dining tables, salas and balconies as well as those of the unfortunate establishments forced to contend with almost total absence of customers due to lack of electricity.   

We are informed that ILPI, the City’s lone distributor of electricity, needs 39mw to supply the power needs of the City during peak hours. It has contracted PSALM, a state-owned power industry generator (it generates power through National Power Corporation) to supply the City 23mw. This power supply contract was already in effect in August 2011 and is to last up to the end of 2012. Yet, despite the apparent deficiency, the City had not experienced brown-out, this even if the supposed peak requirement is 39mw and ILPI only gets 23mw from PSALM. Brown-outs came to the fore only when this 23mw supplied by PSALM to ILPI was further reduced to lower level due to alleged lack of power generation capabilities.

Apparently, PSALM committed to supply the Mindanao Grid, through its contracts with DUs and ECs, 1169mw for the month of March. However, its actual capability is limited to only 1122mw while total peak requirement as projected by NGCP is 1277mw. This does not include the required ancillary needs, particularly contingency reserve and regulating reserve which is roughly around 150mw. In other words, Mindanao needs 1427mw for the month of March but available power is only 1122. 

The current power shortage that besets the City of Iligan and the rest of Mindanao, save for Cagayan de Oro and Davao City, is a result of poor planning and a total failure to adapt to the changing power generation regime in the country. Undoubtedly, the government continues to wash its dirty hands. It plays possum and appears helpless. It seems incapable to stand-up to the pressures of big power industry players. While it may be true that more capacity will be coming in the next 3 or 4 years, there seems to be no immediate solution to the current power shortage. The only thing that you can hear from the government is to require all distribution utilities and electric cooperatives to source and purchase their much needed power requirement and complement what they buy from PSALM, from private generators. Undeniably, this seems to be the urgent solution. But at what price? Does it not matter to the government that doing so will drive electricity prices to high heavens? This power shortage is not unknown to the government. This has been projected 5 years ago. The Department of Energy knew all along that we are going to have this cycle again. That we have in fact suffered the same fate that we did in the early 1990s speaks volumes of the kind of government policy we have. It is not that our policy makers failed to predict this tragedy. It is not that our smart politicians failed to plan for this kind of crisis. The thing is our policy makers and politicians allowed this tragedy to once again befall upon us. The government does not want to put up new power plants. It wants private capital to build new plants in Mindanao where grid rate is low at 2.90/kwh. Most if not all of the power plants that are currently built in Mindanao are non-hydro. Currently, our hydro plants contribute almost 50% to the total power requirement, resulting to a lower generation mix rate. You can thus expect for power rates to start increasing once these non-hydro plants join the grid. 

Take the case of Iligan City. ILPI contracted MEGC, an IPP, to supply it with 12.75mw. How will this impact to the cost of energy that consumers will be paying to ILPI? In a decision dated September 8, 2011, the ERC provissionally approved the Power Supply Agreement between ILPI and MEGC which will result to an increase in the cost of electricity at 2.23/kwh. This increase is brought about by the generation mix between what ILPI bought from PSALM at the rate of 2.82/kwh and its contract with MEGC at 9.46/kwh. When MEGC starts operating, you can expect your electricity cost to skyrocket to Mars. Simple arithmetic: if you consume 500 kw in a given month, you will pay P1115.00 more. Not only that, prices of all other basic commodities will increase. Remember, this trend is not only happening in Iligan. This is true to the rest of Mindanao. What will happen to the lowly Juans and Marias, the Omars and Sitties and the tribals of Mindanao is not something to look forward to. For truly, we will all suffer the inimical consequences of a power industry that has been totally abdicated by the government and left in the hand of the private capital!

In regard to ILPI’s contract with MEGC, the increase of 2.23/kwh is based on the fact that MEGC’s power will constitute 34% of the total power needs of ILPI. Allegedly, ILPI needs 38MW and will source 34% of that from MEGC. What is interesting to note however is how much really is the peak requirement of ILPI since this will impact on the generation mix rate. This increase is warranted and approved by ERC on the basis of 38MW peak requirement. One can look into the records of NGCP and PSALM?NPC to determine the historical peak requirement of ILPI, i.e. whether or not it is justified to peg its peak power requirement at 38mw.

There is also the matter of Iligan City’s IDPP 1 and 2. These plants were operational when these were turned over to the city by PSALM. If the City decides to operate these plants, whether by itself or through O&M agreement with a third party, will ILPI purchase power from the City? By the way, did the City offer its untapped power to ILPI before this current power crisis? Or knowing that it had a deficit, did ILPI explore the possibility of buying untapped power capacity from the City before it contracted MEGC? Well, if the City decides to operate these plants and ILPI, bound by its with contract with MEGC, will not buy, the best option is to contract other DUs and ECs and use the profit to subsidize the power bills of the residents of the City. This is Solomonic and it can  win elections, eh!

 

If there is enough capacity, why the brown-outs?

Today, October 15, 2010, the Mindanao Grid has a dependable capacity of 1, 178.5 Mw. It also has an additional capacity of 166 Mw from the embedded generating untis. These embedded generating units are capacities of distribution utilities and/or cooperatives which they can immediately dispatch without going through the transmission backbone of NGCP. In short, the Mindanao Grid has a total dependable capacity of 1, 344 Mw.

On the other hand, total peak demand. i.e. demand for electricity during peak hours like 6pm to 8pm, is estimated at 1, 118 Mw. Compared to the total dependable capacity of 1, 344 Mw, or 1, 178 Mw without the embedded plants, there is no doubt that demand during peak hours can be addressed. Yet, despite this fact, the Mindanao grid power consumers are experiencing the unwanted, annoying and exasperating rotating brown-outs. A case in point is the scheduled daily 2-hour brown-outs in Iligan City—a city nearest to the source of most of the sources of electricity. Daily, a portion of Iligan City is plunged to darkness from 6pm to 8pm. This is also true in some other areas in Mindanao. This is way beyond the explicable!

Let us go by the records of NPC and NGCP. As of this writing, NPC’s hydro plants can generate 709.5 Mw for 6pm; 667.5 Mw for 7pm and 704.5 Mw for 8pm or a total of 2, 081.5 Mw for the period 6pm to 8pm. Also, there is a dependable capacity from the following power plants in the grid (IPPs) and embedded plants:

Coal Power Plant in Villanueva        – 210 Mw
Mt. Apo Geothermal                          – 100 Mw
Other IPPs (diesel) and embedded – 315 Mw
_____________________
625 Mw

The 625 Mw capacity of the other plants plus the generating capacity of NPC’s hydro plants during peak period (6pm to8pm) is more than enough to address the peak power requirement of the grid. Again, we are asking, why are the people of Mindanao are forced to accept the infuriating rotating brown-outs?

Again,  let us go by the records. Based on the afore-stated capacity nominations of NPC, NGCP will dispatch only 633 Mw for 6pm, 658 Mw for 7pm and 562 Mw for 8pm or a total of 1, 853 Mw from 6pm to 8pm.

Plants	NPC Nomination(6pm)	NGCP Load Dispatch (6pm)
Agus 1	30	28
Agus 2	130	105
Agus 4	150	125
Agus 5	27.5	27
Agus 6	127	120
Agus 7	50	38
Pulangi	194	190
Total	709.5	633	– 76.5

Plants	NPC Nomination(7pm)	NGCP Dispatch (7pm)
Agus 1	30	35
Agus 2	108	105
Agus 4	150	129
Agus 5	27.5	27
Agus 6	125	122
Agus 7	46	40
Pulangi	181	200
Total	667.5	658	-9.5

Plants	NPC Nomination (8pm)	NGCP Dispatch (8pm)
Agus 1	30	30
Agus 2	130	75
Agus 4	150	92
Agus 5	27.5	27
Agus 6	126	117
Agus 7	50	31
Pulangi	191	190
Total	704.5	562	-142.5

Time	Total NPC Nomination	Total NGCP Dispatch	Variance
6pm to 8pm	2081.5 mw	1853 mw	– 228.5

Clearly, had NGCP followed NPC’s nominations, there would be enough electricity during the peak hours from 6pm to 8pm. Take the case of the total nomination for 6pm. NPC nominates a total of 709 Mw. Assuming that of the 625 Mw, only 500 Mw can be dispatched then Mindanao would still have 1, 209 Mw for 6pm, enough to address the forecasted peak demand. The same is true for the 7pm and 8pm periods. And so we are asking! Why the brown-outs?

Implement the ERC decision, now!

Power rates in Mindanao are expected to sharply go down following the order of the Energy Regulatory Commission (ERC) to the Aboitiz-owned Therma Marine Inc. (TMI) to refund consumers for over-recovery in capital cost.

Finally, in the face of the continuing rotating brown-outs in Mindanao, the Energy Regulatory Commission has spoken. Its order to reduce the ancillary rate applied for by Therma Marine and NGCP means a reduction of P0.52518 per kilowatt-hour. This may not be enough to alleviate the conditions of the poorest of the poor in the Mindanao region, but the ERC deserves a pat on the back on this. This is not however the end of our advocay. We will continue to hold our vigil and light our candles, so to speak. We shall be vigilant and will not waver in our effort to radicalize electricity consumers in the region and make them believe that they can influence the stability and affordability of the electricity they consume.

The ERC Has Ruled, finally!