Business groups scrounge 300 MW more

September 18, 2014 at 11:37

By Claire-Ann M. C. FelicianoSenior Reporter


SEVERAL business groups have committed to provide an additional 300 megawatts (MW) for Luzon in order to address a shortage expected in the summer months of 2015.

The Philippine Chamber of Commerce and Industry (PCCI) said in a statement yesterday that “the country’s largest business organizations and foreign chambers have committed over 300 MW to the Interruptible Load Program (ILP).”

The ILP is a measure by which big consumers run their own generation sets to ease power demand in exchange for compensation.

A check with the Department of Energy (DoE) showed a total of 142 MW currently enrolled under ILP, but only 71 MW expected to be generated at any given time.

PCCI said the move of the business groups was in response to DoE’s call to build up energy reserves and avert potentially crippling outages.

PCCI said the Makati Business Club (MBC); Semiconductor and Electronics Industries of the Philippines, Inc.; the American, European and Korean chambers; cement and steel manufacturers; as well as locators at areas under the Philippine Export Zone Authority expressed willingness to participate in the program.

They are “ready to run their standby generator sets and de-load [sic] from the grid during peak hours, when electricity usage is at its highest and there is a need to augment generation capacity in the grid,” PCCI said in its statement.

The expected supply gap next year — estimated at around 300 MW -g could result in four- to five-hour outages at peak hours or between 11:00 a.m. to 1:30 p.m. and 6-8:30 p.m., according to PCCI.

At the same time, however, the additional 300 MW under ILP could drive up costs for consumers.

PCCI said running these capacities for five hours for five days a week — assuming fuel cost of P45 per liter — “is estimated to increase the consumer’s bill by approximately P0.08 per kWh (kilowatt-hour) only for the month that the ILP is implemented.”

But it argued that utilizing ILP capacities will avoid even higher costs that could be incurred were the government to contract additional capacities under a “take-or-pay” fixed-term lease with government subsidy.

Last week, President Benigno S.C. Aquino III said he will invoke the power crisis provision of the Electric Power Industry Reform Act of 2001 to address the supply shortage. Mr. Aquino said he will soon formally ask Congress for a joint resolution that will authorize the national government to contract additional generating capacity.

Besides the 300-MW shortfall estimate, the government wants another 300 MW in reserves for the Luzon grid.

Several business groups last week welcomed Mr. Aquino’s statement, but some like the American and European chambers and the MBC are still pushing for the ILP as a better solution. PCCI said yesterday that all stakeholders should instead push the ILP to ensure sufficient capacity is in place by next year’s summer months.

“If properly programmed and implemented, the ILP can be the ready mechanism for responding whenever any significant or severe supply situation, whether planned or otherwise, threatens to happen and avoid any disturbing power cost jump as was experienced in December 2013,” PCCI said.

It was referring to the record-high power rate increases that Manila Electric Co. (Meralco) was supposed to charge amid higher costs incurred from power suppliers. High Wholesale Electricity Spot Market (WESM) prices have been blamed for the P4.15/kWh rate hike Meralco was supposed to start implementing in stages last December. The adjustment is now on hold due to a Supreme Court injunction. Meralco also sought a P5.33/kWh hike for January but slashed this to P0.45/kWh after WESM prices for December were revised. Regulators have yet to rule on the revised petition.

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