Shortage of power supply in Luzon, Mindanao

Luzon may get lucky to experience no brownouts this dry season despite tight power supply that requires 300 megawatts more during day-time peak hours.

Energy (DoE) Sec. Jose Almendras told members of the business community led by the Philippine Chamber of Commerce and Industry (PCCI) that the Visayas, except for a few islands, has escaped the power crisis with the commissioning of three new coal-powered plants in Cebu and Panay. 

The new plants will be more than enough to meet peak demand and required reserve margins in the central Philippines group of islands.

The daily brownouts in Mindanao may persist this year as no new generating capacity is expected to be added.

“We have had a little luck as electricity demand in Luzon went down last December and in January because of the cold weather,” Almendras said.

The biggest island has very thin reserve and may need to import the excess capacity in the Visayas and activate the retired oil-fired generation plant in Navotas if the situation deteriorates.

“We are monitoring the performance of the power plants daily and checking if private sector owners of the sold National Power Corp. (Napocor) plants are upgrading the efficiency of aging plants” he explained.

“We realize that the DoE is not as powerless as earlier thought under the Electric Power Industry Reform Act.”

During the Philippine Business Conference last October, the organization of independent power producers assured the nation’s business leaders that a power crisis in Luzon can be prevented by rehabilitating the aging power plants they bought from the government.

Almendras said his department is concerned about Luzon because the only baseload power plant being built by GN Power will be ready only by 2015.

He was informed by the business leaders that some foreign and local investors are ready to build new plants but they could not hammer out long-term supply agreements with big end-users.

Because of this problem, most of the planned investments have been put on hold while the dependable capacity of power plants in Luzon is getting overtaken by the demand for electricity.

They suggested that DoE must start bidding out power plant projects the way it did to solve the power crisis in the early 1990s.

A recent Supreme Court decision on a power distribution issue in Cebu advanced the legal opinion that the EPIRA law did not strip the DoE of its powers when created by Congress in 1992.

The business leaders were unanimous in their assessment that the current DoE leadership is fully aware and understands the challenges confronting the industry and expressed strong confidence in the capacity of the DoE to solve the problem.

The DoE committed to undertake continuing dialogue with the business leaders as well as other private sector groups to ensure timely and responsive action to the industry’s issues.

Mindanao businessmen oppose excessive electricity rates

Mindanao-based businessmen have formed the Mindanao Electric Power Alliance (MEPA) in opposition to what they called the excessive electricity charges slapped by a private company whose power barges were deployed to bridge the power supply shortages in the island from March to July this year.

David Tauli, a member of the MEPA board, condemned the new fees covering the power shortage months as excessive.

Tauli said that ancillary charges on the two barges were pegged at P415.78 per kilowatt this year compared to only P49.76 charged on the same services last year.

In addition to the ancillary charges, the local arm of the National Transmission Corp. (NTC), the NGCP, also imposed P9 per kilowatt hour that it supplied when the actual generating cost was only P3 per kilowatt hour, Tauli claimed.

Tauli said that the two barges fielded in Mindanao at the height of the power shortage crisis on the island from March to July this year, are now owned by Therma Marine Inc. which bought those barges from the National Power Corp. at $10 million.

In computing the excessive ancillary services fees, TMI has reportedly valued its barges at $30 million or three times the floating power plants’ purchase price.

“The power issue is devastating to industries and commercial establishments in Mindanao,” Tauli added.

He appealed to the Energy Regulatory Commission (ERC) to reject the petition of the barge operator and its partners to legalize those excessive fees.

Philippine company to produce ethanol for vehicle fuel

A local company would soon start commercial operations of a green plant that produces ethanol for vehicle fuel or raw material for the manufacture of liquor, methane gas, electric power and organic fertilizer in Negros Occidental.

The green project, dubbed as Roxol Methane Recovery Project, was unveiled by Engr. Ramon Picornell at the opening of the recently held international eco show at the Mall of Asia in Pasay.

Picornell said that the main raw materials in such an operation are cane juice and bagasse, the stalks of sugarcane after the sweet juice is extracted in nearby sugar mills.

“There are several ethanol processing plants in the country and most of them throw out huge volumes of waste water. In the case of our project, there is practically zero waste,” said Picornell, chief executive of Roxas Holdings, Inc.

The plant has been designed to produce ethanol originally intended to meet the required mixture of renewable fuel with gasoline used in fueling motor vehicles. But test production has shown that it costs P38 per liter which is higher than the pump price of diesel fuel.

The liquid waste is fermented in giant digesters or fermentation tanks that further extract methane which is used, together with bagasse, as fuel for the plant’s boiler that, in turn, produces its own electric power.

The whole operations require two megawatts of electricity, while its power plant was designed to generate four megawatts. This gives the company the option to sell its excess capacity to the local electricity distributor.

Picornell revealed that the electricity produced has been found competitive at a cost of only P4 per kilowatt-hour or less than half the retail prices of electric power across the archipelago.

He said that its excess recovered methane will likewise be sold commercially. The dried solid waste which is rich in natural fertilizer, will be used to nourish the sugarcane planted in the company’s own plantation.

The whole project does not, however, come cheap. In all, Roxas Holdings has invested $43 million or roughly P1.4 billion to build.

Power supply shortage in Mindanao and Luzon

The Department of Energy (DOE) has admitted that power supply in Luzon and Mindanao are now at a precarious state.

A spokesman representing energy Secr. Jose Almendras had admitted during a business conference recently that the rotating brownouts in Luzon and the power crisis in Mindanao is the result of an emerging  electric power supply crisis.

In the case of Luzon, the DOE spokesman said that of the 2,000 anticipated requirement between this year and 2012, only 600 megawatts are due to be added next year. A lot more investments are therefore needed by Luzon.

There have been several proposals that reached the DOE, she said, more than enough to cover the projected power deficiency. But for one reason or another, these have not been put on the ground. She advised the businessmen to get in touch with their power suppliers and negotiate for reliable power supply.

The spokesman revealed that the government has turned over most of the state-owned power plants in the Luzon grid. This opens the doors for direct access of end users of electricity to power generating companies.

Since the electric power industry has been turned over to the private sector, the challenge of providing enough supply to cover demand is now in their hands,the DOE spokesperson asserted.

Under the Electric Power Industry Reform Act (EPIRA) signed into law in 2001, direct buying of electricity by those that consume one megawatt a month or more will be given the privilege to negotiate their supply directly with power generating companies.

In Luzon, the government has sold out more than 90 percent of the plants that the National Power Corp. used to own.