Power System Update as of March 9, 2010

Measures to address power crisis identified; consultation set

FOLLOWING a directive from President Gloria Macapagal-Arroyo, the Energy department yesterday presented measures to address the power crisis in Mindanao that do not require congressional approval.

"[The measures that the government will undertake were] part of the Cabinet meeting. [Energy] Secretary [Angelo T.] Reyes presented options and these are the ones that will be deliberated [upon] by a group of Cabinet members to address the Mindanao [power] problem," newly appointed Executive Secretary Leandro R. Mendoza told Palace reporters in a briefing yesterday.

To be discussed with concerned Cabinet officials and private sector groups in Malacañang either tomorrow or on Friday, he noted, are:

• partnership between the government and private sector for the lease of modular generator sets having a total capacity of 160 megawatts;
  
  
• shifting of operating hours for Mindanao-based manufacturers and heavy power users to 10 p.m. to 5 a.m. from the normal 8 a.m-5 p.m. work period to take advantage of excess power supply at night time and ease demand at daytime;
  
  
• supply augmentation program, similar to the scheme adopted in the Visayas, by providing incentives to firms opting to use their own power generators at peak hours. This would be approved by the Energy Regulatory Commission; and
  
  
• transferring power barges to Mindanao from Luzon.

Mr. Mendoza said the details of the proposals, such as which companies would be tapped for the leasing of generator sets and how the scheme would be financed, and impact of changing manufacturer operating hours, would be threshed out in the meeting.

"Even without the approval of Congress, the solution[s] offered can address adequately the problem of power shortage in Mindanao. Among the considerations are the cost of the procurement and timing because by June we will already have rains," Mr. Mendoza said.

Mrs. Arroyo, given negative responses from Senate President Juan Ponce Enrile and Speaker Prospero C. Nograles, has dropped a proposal to convene Congress in a special session to approve a joint resolution that would empower her to tap power generation facilities and alleviate the power crisis. The process is provided for in the 2001 Electric Power Industry Reform Act.

The congressional leaders cited difficulty in mustering a quorum as most lawmakers are busy campaigning, and that the President has enough powers to address the issue.

Meanwhile, Presidential Adviser for Mindanao Jesus G. Dureza said in a text message that member-firms of the Mindanao Electric Power Alliance (MEPA) have expressed interest to partner with the government for the leasing of generator sets. MEPA, a private sector group, was launched during last December’s Mindanao Power Summit in Cagayan de Oro City.

For his part, Vicente T. Lao, chairman of the Mindanao Business Council, said in a phone interview that companies may be hesitant to participate in the lease of generating sets due to the huge capital requirement. On this concern, he added, the group is seeking state assistance.

Mr. Mendoza explained in the briefing that the government is studying tapping the lending windows of state-run Land Bank of the Philippines and the Development Bank of the Philippines to pay for leasing costs.

As to how manufacturers would be encouraged to shift operating hours, Mr. Lao said: "It would really depend on the product line of the factories. In general, they are flexible. I think manufacturers can adjust."

On the supply augmentation program, Mr. Lao said MEPA members are conducting an inventory to determine how much generating capacity can be shared.

But on the transfer of power barges from Luzon, he said the costlier scheme could result in higher rates that would be shouldered by the consumers.

Portions of Mindanao have been reeling from long blackouts with power deficiency now at 65% of normal capacity, resulting in eight- to 10-hour rotating brownouts.

In a related development, the national government should allow companies to import tariff-free generation sets that could immediately be installed in Mindanao, administration presidential bet Gilberto C. Teodoro, Jr. said on Tuesday during a forum at the Ateneo de Davao University.

Another bet, Nicanor Jesus P. Perlas III, an independent bet, offered what he describes as a "smart grid" solution where anyone could be allowed to generate power to supply the Mindanao grid.

He said the person or entity must be "rewarded by the distributing utility for the power generated." -- Gerard S. dela Peña with CQF