Limited Epira emergency powers pushed

Concerned that government’s re-entry may warp the energy market, groups are seeking limited emergency powers for the state to address power supply gaps in 2015 and 2016.

Proposals to invoke Section 71 of the Electric Power Industry Reform Act (Epira), in which Congress will be asked to authorize President Aquino to address the power shortage, has had mixed reception among various business and consumer groups.

The Management Association of the Philippines’ energy committee, for its part, has suggested for the state to be allowed to contract “insurance” capacity but only for a period of two years and only for 300 megawatts (MW) of capacity.

MAP energy committee head Ernesto B. Pantangco told reporters that contracted generation units should only be tapped during “yellow alert” (periods of supply shortfall) conditions for a fixed rate. The group is also pushing for the creation of an advisory committee of industry experts to assist government implementation over the two-year period. Without setting limits upfront, such state-imposed energy contracting may go so many ways, Pantangco explained.

Pantangco told reporters that his committee is open to state contracting of “insurance capacity” in case other programs fall short. Among them are the Interruptible Load Program (where big power consumers use their own generators to ease grid demand), energy management (where users are told to limit power usage at peak times), and the proposed lifting of the secondary cap in the Wholesale Electricity Spot Market.

Artificially setting lower energy spot market prices, Pantangco said, makes peaking plants stop running to avoid incurring financial losses. Lifting the secondary cap alone may restore some 1,000 MW of existing capacity during periods of high electricity demand, Pantangco said.

Some 11,700 MW is expected to be online in the summer of 2015, Pantangco said, but decision makers are factoring in an outage rate of about 7 percent since power plants encounter technical troubles now and then. Some will be performing at lower capacities when the Malampaya natural gas operation is halted for scheduled maintenance and the installation of a new platform to sustain production.

There will be another meeting today to determine if there is enough supply, Pantangco said.

Consumer groups such as People Opposed to Unwarranted Electricity Rates (Power) earlier hit the proposal for government to be given emergency powers to deal with the country’s tight energy supply. Power said in a position paper that the solution proposed by Energy Secretary Jericho Petilla to lease or put up bunker or diesel plants at P1.2 billion each would add supply but at a cost consumers will find hard to bear. The group instead proposed fast-tracking solar power plant projects since the technology allows construction within three to six months, with further capacity to be added as needed.

Another group, Government Watch, led by industrialist Raul T. Concepcion, said it is against invoking Section 71 of Epira. Government Watch said the state has other means to avert rotating brownouts that could cripple the economy and stunt the country’s economic growth.

Secretary Petilla said separately that he has been meeting with business groups on whether they can assure enough power supply for the summer of 2015, at least, so that government does not have to intervene in the market.

“Unless [power industry stakeholders] can assure adequate supply, [the Department of Energy’s] recommendation on Section 71 remains,” Petilla said.

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