Lawmakers suspend power market

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Thursday, March 6, 2014


THE Committee on Energy of the House of Representatives unanimously approved the suspension of the operation of the Interim Mindanao Electricity Market (IMEM) before it adjourned its public hearing Thursday.

Taking cognizance of the negative opinions and sentiments regarding the effect of the IMEM coming from the different distribution utilities and power generating companies in Mindanao, Representatives Edgardo Masongsong, Vicente Belmonte Jr. and Maximo Rodriguez moved and seconded that the operation of the IMEM be suspended, while they encouraged the implementation of a Department of Energy (DOE) circular signed by DOE Secretary Carlos Petilla on March 4, 2014.

The DOE circular directed all existing power generation companies, including embedded generators, owners and operators of standby generating facilities, to make available their generating units to augment the power supply in the Mindanao Grid.

 Interim Mindanao Electricity Market public hearing
CAGAYAN DE ORO. (Left to right) Rep. Mike Rivera of 1 Care partylist, Oriental Mindoro Rep. Reynaldo Umali (chair, Committee of Energy) and Rep. Edgardo Masongsong of 1 Care partylist answer queries from reporters during the public hearing on the Interim Mindanao Electricity Market at one of the hotels here on March 6, 2014. Before the hearing adjourned, the lawmakers suspended the IMEM. (Joey P. Nacalaban)

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Representative Rufus Rodriguez of Cagayan de Oro City’s second congressional district said IMEM is not fit for Mindanao since there is an undersupply of power in the archipelago.

Since there is a lack of supply, Rodriguez explained the power generators could dictate the price of electricity as high as they want.

“The suppliers can benefit from this -- they can sell until P32 per kilowatt-hour especially when the hydro source of electricity is low,” he said.

He added that if the distributors or electric cooperatives do not buy from the price set by the power producers, their option is to either implement a blackout or increase the price of electricity that will be passed on to the consumers.

Rodriguez feared that during summer, when the hydropower supply is low, the private power generators can impose a high price of electricity that will burden the people in Mindanao.

Meanwhile, Bayan-Muna partylist representative Carlos Zarate said that through IMEM, the power producers could raise the price up to the cap that is P32 per kilowatt hour.

Zarate said IMEM is a deregulated market in which power producers can really profit but will put the heavy load on the consumers.

He said the generation charges are automatically billed to the consumers.

Zarate added that the consumer could only complain after the increase in the Energy Regulatory Commission (ERC).

He said IMEM is the same with Wholesale Electricity Spot Market (WESM) in Luzon that cause the price hike on electricity for the past seven years.

“We have seen the evils of WESM in Luzon. Why bring it to Mindanao?” Zarate asked rhetorically.

Zarate said the low supply of power in Mindanao made the IMEM susceptible to manipulation by the power producers.

“You can’t play with the prices of electricity like the stock market because it is a basic need and it directly affects the needs of the people,” Zarate said.

He said WESM and IMEM are both products of the Electric Power Industry Reform Act of 2011 (Epira of 2001) that only bring additional burden to the poor Filipinos.

Repeal Epira law

Zarate said Epira law should be scrapped because it paves way for the privatization of state-owned power companies and the power spot markets.

“We have the most expensive electricity in the entire Asia,” Zarate said, putting the blame on Epira law.

He said Epira law paves way to the selling of Power Barge 117 and 118 to Aboitiz Power.

Zarate said the power barges are not used in its full capacity in order to keep the supply of power in Mindanao under control.

“The power barges use only 30 percent of its capacity to keep the supply of electricity tight,” Zarate said.

He said through tightening the supply, the power generators could increase their price up to the price ceiling.

Zarate said that for 13 years, no new electric generators were built, instead, the government owned power generators were sold to private corporations that are profit-oriented.

He added that power generation companies provide basic services like electricity and should not be owned by profit-oriented private companies.

Zarate said if the Epira law will be repealed, a law should be created that will bring back power generation companies to government control.

Rodriguez said “we couldn’t sell the hydroelectric companies in Mindanao that are state-owned because it will become profit-oriented.”

Instead, Rodriguez proposed that the government should hire private companies to rehabilitate and maintain the hydropower facilities in Mindanao to increase its performance.

Zarate and Rodriguez agreed that the government should invest in renewable sources of electricity in Mindanao -- solar, wind and hydro sources of power.

Zarate said hydropower facilities in Mindanao are favorable because of the body of waters available in the archipelago.

He said the government could use the Malampaya funds to establish hydropower facilities in Mindanao.

During the public hearing on the IMEM at a hotel here on Thursday, Rodriguez said 90 percent of the cooperatives and consumers are one in their clamor to abolish or suspend IMEM because it burdens the consumers and electric cooperatives.

In a statement sent to Sun.Star Cagayan de Oro, the Mindanao Power Monitoring Committee (MPMC) sought the immediate dispatch of capacities from embedded generators of distribution utilities, including newly-installed modular gensets of several electric cooperatives to bridge power supply deficit resulting from the unscheduled shutdown of 210MW Steag coal-fired power plant.

In a meeting called last Friday to assess the situation and determine the cause of the February 27 island-wide blackout.

“We find it viable to quickly resolve the supply deficit by tapping what is already available in the system, as measures are being exerted to restore affected power plants back online,” said Secretary Luwalhati Antonino, chair of the Mindanao Development Authority (MinDA), which also heads the MPMC.

The MPMC had asked private distribution utilities (DUs) to run its embedded capacities such as diesel generators, even as it requested the Energy Regulatory Commission (ERC) to judiciously accelerate provisional approval of pending rate applications for modular gensets that have already been installed.

It also asked DUs and electric cooperatives distribution to urge large commercial establishments and industries to implement demand-side management measures such as adjustment of operating schedules for processing and manufacturing plants and to opt-in for Interruptible Load Program (ILP), a mechanism where large establishments such as malls and factories run their generator sets instead of tapping from the grid and are allowed to recover cost.

Antonino said the recent system downtime affecting large capacities should be immediately resolved, in light of the approaching onset of summer months when Agus-Pulangi hydroelectric power complex would be expected to have reduced output.

According to initial findings of the Department of Energy (DOE), a malfunction of Agus 1 hydropower plant unit set-off automatic shutdown that cascaded to several other power plants that put offline around 1200MW supply to the Mindanao grid.

The National Grid Corporation of the Philippines (NGCP) has restored stability by noontime of same day, with the system blackout regarded as technical in nature. However, despite system restoration, the 210MW Steag coal-fired power plant remained offline after its plant units 1 and 2 sustained damage to its turbine generating sets.

Steag is still assessing the extent of damage and expects to provide timeline for resumption of plant operations once assessment is completed. Initial technical evaluation indicates Steag needs around eight to 12 weeks to restore plant units back online.

Steag State Power Inc. (SPI) Plant Manager Dr. Carsten Evers said that the company has intensified its efforts in restoring the units back on line noting the precarious and volatile power supply condition in the island.

According to the DOE, the Steag downtime has brought restoration of Mindanao power supply to only about 80 to 85 percent.

Published in the Sun.Star Cagayan de Oro newspaper on March 07, 2014.

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