Clear ‘funding source’ for ILP compensation pressed

by Myrna Velasco, December 28, 2014
from Manila Bulletin

Affected power industry players have been urging Congress to clearly demarcate the funding source of the proposed compensation scheme for the entities which shall be participating in the expanded interruptible load program (ILP) – being part of the solution to next year’s tight power supply predicaments.

In a joint recommendation to Congress, the industry players have noted that “the funding for compensation of ILP transactions implemented by the National Grid Corporation of the Philippines and the participating DUs,” shall be defined appropriately.

Industry stakeholders actively making their voices heard in the legislation and policy-making process for the Section 71 mandate include the Philippine Independent Power Producers Association (PIPPA), Retail Electricity Suppliers Association, Meralco as well as other distribution utilities.

This was formally recommended to the lawmakers who have been working on the Joint Resolution invoking Section 71 of the Electric Power Industry Reform Act (EPIRA) that shall bestow powers on President Aquino to solve the country’s threatening power supply crisis.

The Lower Chamber has already passed its own version of the joint resolution, but its counterpart measure in the upper chamber is still up for further deliberations.

Under the expanded ILP or the call for de-loading of capacity of self-generating facilities so grid supply can be shored up, it was propounded that system operator National Grid Corporation of the Philippines (NGCP) shall be held as “the ILP administrator for DCCs (directly-connected customers); freeport zones and those under the Philippine Economic Zone Authority (PEZA) and distribution utilities (DUs) other than Meralco (Manila Electric Company).”

There have been proposals for President Aquino to allot ‘subsidy’ from the Malampaya fund, but there are parallel recommendations that the ILP participants would just be allowed to fully recoup their costs via filings with the ERC.

The DOE is still uncertain at this point how the proposed ‘compensation scheme’ for ILPs will be carried out — and even on the final source of the required funding. The Executive and Legislative branches of government are, in fact, still at odds on how to resolve next year’s power supply dilemmas given their differing views on the planned quick fixes.

If the compensation or cost recovery scheme for ILP participants will not be judiciously addressed, it has been noted that the program may fail because participation is after all called on “voluntary basis.”

A carrot-and-stick approach was earlier sounded off by the Lower House, that if the targeted ILP candidates will not register for their formal participation into the program, they will run the risk of not being compensated for their capacity de-loading or they could be cut off in their electricity service from the grid without notice.

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