Energy yearender: Searching for long-term solutions

by Claire-Ann M.C. Feliciano, January 13, 2015
from Business World Online

THE COMING dry season will be challenging for the energy sector, which will struggle to meet demand as hydroelectric sources dry up, potentially exposing consumers to crippling outages.

This was the outlook given by Energy Secretary Carlos Jericho L. Petilla, who declined to give a precise estimate of the looming shortfall.
The uncertainty of power supply — a problem which used to be confined to Mindanao — has now spread to Luzon, which accounts for around 70% of the country’s output.

Latest figures showed an additional 782 megawatts (MW) is needed to avoid supply disruptions between March and June this year.

“In the power sector, every day provides a different learning experience,” Mr. Petilla said in an e-mail interview.

“The dynamism of the power sector is a certainty; we are confronted with challenges of varying degrees. This year’s summer just presents a more challenging situation that will test existing mechanisms,” he explained.

Are consumers helpless? The Energy chief doesn’t think so.

“Consumers can be more proactive and be more aware of our current state of affairs,” Mr. Petilla said, adding that “demand-side management” was a matter he hopes to raise the profile of with the broader public.

The circular enjoins public and private establishments, which includes households, to participate and practice different energy conservation measures.

“Examples are putting your air-cooling systems to 25 degrees celsius and replacing you lighting with LED lights,” Mr. Petilla said.

“We also have an interactive Web site for smart energy choices, where you can also find different conservation measures you can apply at home,” he added.

Mr. Petilla assured that the government is cooperating with the private sector for the solutions to mitigate the potential adverse impact of the power supply shortfall.

But he admitted that the interruptible load program (ILP) — which relies mostly on the private sector — is seen the most viable measure right now.

The ILP is a demand-side management solution meant to alleviate the power supply situation by calling on big consumers to run their own generator sets instead of drawing power from the grid. Parties joining the ILP will be compensated for their participation.

“The ILP can be of assistance in easing the power problems this summer,” he said.

Mr. Petilla said existing ILP rules provide that the program is ILP activated when the grid enters the red alert stage — which means demand will need to outstrip available supply before participants activate their generators.

“The ERC (Energy Regulatory Commission) has started the process of amending the ILP Rules and expanding its coverage,” Mr. Petilla said.

Mr. Petilla said the Department of Energy (DoE) wants to activate ILP even during the yellow alert level — or when reserves are thinner than required — to avoid rotating power outages.

Latest data from the DoE showed that a total of 197.55 MW are already enrolled under Manila Electric Co.’s ILP and there is still potential for 55.9 MW more.

The agency is also expecting a total of 444.94 MW from the contestable customers or those who have their own retail electricity suppliers.

“We will come up with a new and updated list by the end of January. At present, we are securing more commitments from potential ILP participants,” Mr. Petilla said.

Apart from the ILP, the government is also pushing for the fast tracking of committed power projects, and energy efficiency and conservation measures to address the shortfall.

But are these measures sufficient to stem the problem? The government cannot give assurances, but business groups — which are supporters of the ILP — are very optimistic.

As early as the first quarter of 2014, the DoE had flagged absence of new power generation plants in Luzon as potentially causing outages — especially since most of the country’s power plants are prone to unplanned shutdowns due to their age.

The dry season of 2014 was a big challenge to the energy sector as it coincided with the World Economic Forum — an international gathering of world leaders from both governments and the business sector.

Supply was tight throughout those months, but outages turned out to be minimal, caused by the emergency shutdown of some base load power plants in Luzon.

Mr. Petilla in May said an improved supply situation is expected this year as new power plants with combined capacity of nearly 1,000 MW are scheduled to go online by this year’s dry season.

The positive outlook turned sour in July, when Mr. Petilla himself pointed out the need for additional supply — and even suggested invoking the power crisis provision of the Electric Power Industry Reform Act of 2001 (EPIRA).

EPIRA’s Section 71 states that “[u]pon the determination by the President of the Philippines of an imminent shortage of the supply of electricity, Congress may authorize, through a joint resolution, the establishment of additional generating capacity under such terms and conditions as it may approve.”

“The DoE projected thin reserves for the summer months of 2015,” Mylene C. Capongcol, director of the DoE’s Electric Power Industry Management Bureau, said in a separate interview.

“Because of the high level of forced outages and the delays in the committed projects including the de-rating of some power plants, we we