DOE moves to avert Luzon power shortage

By Lenie Lectura & Butch Fernandez – August 4, 2016

from Business Mirror

The Department of Energy (DOE) and the Energy Regulatory Commission (ERC) have begun assessing the country’s power-supply situation, after a series of yellow- and red- alert status were raised in Luzon.

On Thursday, when the National Grid Corp. of the Philippines (NGCP) placed the Luzon grid on yellow-alert status anew, the DOE said it had started looking at all possible mechanisms that would ensure adequate and stable power supply necessary to sustain the country’s economic growth.

In particular, the DOE is assessing the practices of power-generation firms during incidents of sudden plant shutdown.

“The recent spate of yellow alert-status declaration by the NGCP prompted the DOE to assess whether there are enough measures or standards for power-generation companies to ensure their power plants are always in good condition and are able to meet their obligations to their respective customers,” the DOE said.

Mechanisms that are being studied by the agency include looking into the provision of replacement power for contracted capacities and the creation of technical-audit teams to assess the operations and contracts of generation companies (gencos) and distribution utilities (DUs), as well as strengthening the promotion of energy investments to augment the supply of electricity in the country.

“We are keen on improving the power-supply situation in the country. We will strengthen the policies and programs and we will work with the ERC to ensure that all standards are enforced to ascertain reliable, stable and reasonably priced electricity, because we cannot let the people suffer from power interruptions,” Energy Secretary Alfonso G. Cusi said.

‘Price rigging’

The Senate Committee on Energy is poised to conduct a full-blown inquiry into alleged “price rigging” by power industry players following last weekend’s simultaneous shutdowns of six power plants in the Luzon grid, triggering massive spikes in electricity rates charged to millions of consumers.

Sen. Sherwin T. Gatchalian, committee chairman, said on Thursday  the panel’s probe was instigated by Senate Minority Leader Ralph G. Recto’s resolution, citing “possible collusion among industry insiders after the six plants, which provide more than 13 percent of the Luzon grid’s installed capacity, went offline for unscheduled maintenance at the same time.”

“What we want is to determine what really happened and come out with legislation to prevent this type of collusion [from] happening,” Gatchalian said.

He lamented that as a result, electricity prices in the Wholesale Electricity Spot Market (WESM) jumped to five times the normal rate, from an average of P4 per kilowatt-hour (kWh) over the last month to a whopping P20 per kWh on July 29 and 30.

Gatchalian added that senators also want to find out at the upcoming inquiry “if we have mechanisms to prevent collusion and to punish collusion, and that’s where the legislature will come in,” Gatchalian said.

At the same time, the senator affirmed his commitment to work with the Duterte administration in crafting a “forward-looking plan in pursuit of building a stable and efficient energy supply for the entire country.”

He explained that forecasting and planning are very important in the energy sector,” noting that “this is a long-term industry, and to build a plant takes years and years.”

“So, we really need to plan. We really need to develop strong planning and forecasting mechanisms  and, at the same time, work together with the legislature to come up with policies which will support these plans,” Gatchalian added.

Judicious power consumption

The DOE also reiterated its call to the public to judiciously manage energy consumption.

The NGCP placed the grid on yellow alert from 9:01 a.m. to 4 p.m. on Thursday due to “insufficient operating reserve.”

Later that day, the yellow-alert status was extended until 8 p.m. after the San Gabriel plant of First Gen tripped at 2 p.m. Based on the 6 a.m. advisory of NGCP, Luzon system capacity stood at 9,805 megawatts (MW), while the system peak demand is projected to reach 9,128 MW at 11 a.m., leaving reserve capacity at 364 MW. The Visayas and Mindanao grids are operating on normal condition.

A yellow alert is issued by NGCP when contingency reserve is less than the capacity of the largest synchronized unit of the grid. In Luzon this is equivalent to 647 MW, or one unit of the Sual power plant.

A red alert, meanwhile, means that there is severe power deficiency.

From July 25 to August 4, there had been seven yellow alerts and two red alerts raised in Luzon grid.

‘Longest streak’

Prior to Thursday’s yellow-alert status, the NGCP placed the Luzon grid in similar alert status late last month.

According to the Manila Electric Co. (Meralco), the issuance of yellow and red alerts is the longest streak (seven days, or from July 26 to August 1) since April 2004, when the utility firm first adopted the Interruptible Load Program (ILP), according to Meralco Utility Economics Head Lawrence Fernandez.

“In accordance with protocols, upon issuance of the yellow-alert notice, Meralco began advising participants to the ILP to prepare for possible activation, in case the state of the grid deteriorates to a red alert like it did last Friday and Saturday,” Fernandez said in an interview.

Under ILP, customers with large loads, like commercial establishments, will be asked to operate their own generator sets if the grid operator projects a need to augment generation capacity in the Luzon grid.  Through this, the aggregate demand for power from the system will be reduced to a