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Gaps in power supply data spark alarm, probe.

LAST week's widespread rotational brownouts raised grave concern over the country's power supply and reserves, fears of collusion among power producers and doubts on the capabilities of the government agencies whose mandate, among others, is to ensure a stable, reliable and affordable energy.

As of April 13, five power plants, with a combined capacity of 1,437 megawatts (MW), are still out.

But two power plants-Limay unit 2 of SMC Consolidated Power Corp. (150 MW) and Pagbilao unit 3 of Pagbilao Energy Corp. (420 MW)-are expected to be back online on April 16. Another power plant-Sual unit 1 of Team Energy Corp. (67 MW)-is expected to supply power to the grid on April 18.

Meanwhile, the 150-MW unit 2 of Southwest Luzon Power Generation Corp. in Calaca is scheduled to deliver power on April 21. However, the fifth power plant-Limay A1 of Panasia Energy Inc.-that is still on unscheduled outage has yet to declare when it would be back online.

The Luzon grid was placed on red alert notice for three consecutive days last week mainly because many power plants, mostly very old ones, conked out. An even older plant such as Malaya unit 1, and SEM-Calaca Power Corp.'s 300-MW unit 2 plant in Calaca, Batangas, was derated by 150 MW and 100 MW, respectively.

A red alert notice means the projected demand exceeds available power generating capacity. There is zero contingency reserve. Normally, the National Grid Corp. of the Philippines (NGCP) implements Manual Load Dropping (MLD) or rotational brownout during red alert to maintain the integrity of the power system.

And power outages did happen.

According to CitizenWatch Philippines, the issuance of three consecutive red alerts was more than those issued in previous years. In 2018, the Luzon grid was not placed under any red alert status while in 2015 and 2017, only one red alert was announced, said Atty. Hannah Viola, convenor of CitizenWatch Philippines.


Viola said accountability and transparency for power interruptions and outages should be in force. 'This especially holds true on the part of the generation companies as their generation charges comprise a large chunk of what the consumers pay for in their electricity bills,' Viola said.

The Electric Power Industry Reform Act (Epira) dictates the obligation of power producers: Generation of electric power shall be competitive and open. This provision means that abuse of market power should be avoided and its anticompetitive behavior should always be observed.

'This obligation is underscored now more than ever as electricity rates are set to increase this month. This price hike is attributable to higher charges from the Wholesale Electricity Spot Market from the tight supply in the Luzon grid and the weakening of the peso against US dollar,' Viola pointed out.


A Department of Energy (DOE) official said in an interview that the Energy Regulatory Commission (ERC) would be in a better position to determine if the power-generation firms whose power plants went on forced outage last week can be penalized.

DOE Director for Electric Power Industry Management Bureau Mario Marasigan said the agency determines the causes of outages and, most important, the expected dates of the power plants to be online. 'ERC can determine which rules have been broken and corresponding penalties, if there is any, as regulator,' said Marasigan in an interview.

He also clarified that the DOE did not directly issue show-cause letters to the power-generation firms. 'Rather, we invited the officials of the power plants-SLGPC, South Luzon Thermal Energy Corp., Team Energy, Aboitiz Power Renewables Inc. and Semirara-Calaca Power Corp.,' added Marasigan.

Sought for comment, ERC Spokesman lawyer Rexie Digal said the regulator has already started its probe of the power plants concerned. The commission is responsible for validating the reasons that power firms claim for the outage. However, she could not say when the agency will be able to conclude the investigation.

'We need to evaluate the reports that our inspection team will submit to determine whether there were violations committed. It's not because they were inspected [that] there will be findings of violation. Penalties may be fines. As to timelines on evaluation, it will depend on the findings,' said Digal.

Asked if the ERC has sanctioned any power firms involved in past incidents of forced plant shutdown, Digal said, 'I can't remember any recent violation.'


CitizenWatch Philippines also noted that the cartel-like collusion by power generators should be thoroughly investigated as historical data indicate a correlation between the decrease of supply and increase of electricity prices.

'Having a stable supply of power is a matter that is imbued with public interest and general welfare. As the confidence of the electricity consumers and the integrity of electricity market largely depend on the transparency of data, measures should be made to ensure transparency through an energy platform,' said Viola.

The Senate committee on energy chaired by Sen. Sherwin Gatchalian intends to ask the DOE and the Philippine Competition Commission (PCC) to look into possible collusion among the power producers because of the price spike on the Wholesale Electricity Spot Market (WESM). 'We will ask the DOE and also PCC to look for possible collusion,' he said earlier.

Spike in WESM rates

In March, when the Luzon grid was placed on a series of yellow alerts, the Load Weighted Average Prices (LWAPs) in the spot market reached as high as P12 per kWh,' Meralco utility economics head Lawrence Fernandez said in an e-mail reply.

Citing WESM data, Fernandez said the LWAPs for March 4 and 5 were at their highest so far for the year. 'It was P12.698/kWh in March 4 and P11.685 per kWh in March 5,' he said.

In the absence of a yellow alert, the LWAPs normally reached about P7 per kWh. 'In the immediately preceding week, the highest daily LWAP was only P7.327 per kWh. The highest daily LWAP was only P7.48 per kWh,' said Fernandez. Meralco partly sources its power requirements from the WESM. Any adjustment in the cost of power purchased by Meralco is reflected in the generation component of an electric bill. Whenever a yellow or alert is issued, this has an impact on WESM prices.

Separately, the Independent Electricity Market Operator of the Philippines Inc. (IEMOP), operator of WESM, cited indications that the secondary price cap was exceeded at 7.01AM on April 12, when the Luzon grid was placed on red alert for 13 hours.

However, because several intervals were affected by 'market intervention' and 'pricing errors,' the breaching of the secondary cap is still subject to verification.

'We are transparent'

The Philippine Independent Power Producers Association Inc. (Pippa) denied there was collusion among its members.

'All our member generators, especially those who are encountering technical difficulties, are fully transparent and in constant coordination with the lead agencies with the submission of real-time data and updates in order for these agencies to predict and come up with an adequate energy supply and reserve,' it said on Sunday.

Power firms with forced outages are trying to address the problems and are committed to be fully functional as soon as their issues are resolved in compliance with the directive and mandate of the DOE, the group added.

'Pippa members are prepared to answer any and all inquiries as to the status of their plants. In the meantime, we would like to request for the public's patience and trust that these technical difficulties will be fixed in the soonest possible time,' it said.

AboitizPower Chief Operating Officer Emmanuel Rubio, in a text message, said on Sunday the power situation will 'ease up' as demand decreases toward Easter Week and a number of plants on outage are getting back to the grid.

He was referring to unit 1 of TVI, which was placed on commercial operations last week; GNDP unit 1, which will enter the grid later this year; and Therma Mobile Inc. 'A portion of TMO's capacity will be available before the end of April and will remain embedded in the Meralco franchise,' he said.

South Luzon Thermal Energy Corp. (SLTEC), which restored online its unit 1 on April 13, said it will take measures to ensure the continued availability of both units 1 and 2 during the critical election period.

'We exerted all our efforts to ensure that the necessary repairs and other corrective works be performed quickly and efficiently as possible so we can bring back unit 1 online,' said SLTEC President Vergilio Francisco.

'Fake news'

The Senate Energy panel will investigate the unexpected brownouts given that the DOE had given assurances of ample supply of electricity reserve throughout the dry season.

Gatchalian noted the DOE's inaccurate electricity forecast throughout the summer season, noting that it does not include unplanned outages. He said the forecast includes the committed capacities in their available capacity, thus making the projection less realistic.

Comparing DOE forecast with the NGCP projections, Gatchalian said the projected available capacity of DOE is way above the level of the projected capacity of the NGCP.

To illustrate, Gatchalian pointed out that on April 11, the DOE forecast at least 1,085-MW gross reserve, indicating enough supply of electricity for Luzon. In contrast, the NGCP forecast showed that the gross reserve for April 11 was only 236 MW. This, according to the lawmaker, was thin and below the required regulating reserve.

Moreover, on April 12, Gatchalian said DOE gave a forecast that there was still 1,006-MW gross reserve that was enough to power the Luzon grid. However, the NGCP sounded the alarm bells and issued a red alert status after it forecast a gross reserve of only 21 MW for the same day, lower and way below the sum of the required regulating reserve.

'Our power consumers deserve nothing but accurate information. Ang DOE ang pangunahing ahensya na dapat nagbibigay ng wasto at sapat na inpormasyon upang makapaghanda ang ating mga kababayan. Kaso mukhang na fake news tayo ng DOE sa pagkakataon na ito [The DOE is the prime agency that should give accurate and enough information so the public is ready for outages. But it seems we were the victims of 'fake news' by DOE in this case],' he said.

CitizenWatch Philippines said that, while DOE's efforts to provide up-to-date online information on the supply situation are commendable, its pronouncements may not truly reflect the current situation as power interruptions hit Luzon. 'What is actually alarming is the disconnect about what is being publicly disclosed and what is really happening,' the group said.

'Heads must roll'

At least seven provinces along with 40 cities and towns have so far been affected by the rotating brownouts last week due to the forced and unplanned outages of five generators in Luzon.

'The brownouts felt by our constituents in Luzon these past few days is totally unacceptable. Definitely, heads must roll this time. We owe it to the power consumers to give them accurate information on the power situation in the country. It seems the DOE overestimated the available capacity of our power,' said Gatchalian in a mix of English and Filipino.

He noted how the DOE even gave assurances before the start of summer that there will be enough power supply in the country. 'If there's enough power supply, then how come there are towns and provinces in Luzon that are experiencing rotational brownouts,' the senator wondered aloud.
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Publication:Business Mirror (Makati City, Philippines)
Geographic Code:9PHIL
Date:Apr 14, 2019
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