Power sector probed

By Chito Lozada – April 12, 2019 12:07 AM
from Daily Tribune

The sudden shutdown of a number of key power plants that resulted in a power shortfall of 1,500 megawatts in the past two days prompted Energy Secretary Alfonso Cusi to order an extensive investigation to assure that the problem does not impact on electricity prices.

Cusi said the Department of Energy (DoE) will look into unusually high “unscheduled outages,” which even exceeded the 800 megawatts reduction in supply from planned shutdowns.

“The Department of Energy is currently looking into this week’s red alert issuances. To this end, we have been actively meeting with the electric power industry participants to ensure that the underlying issues surrounding the red alerts are effectively addressed by the entire energy family at the soonest,” he said.

“We are looking into the terms and conditions of the power supply agreement (PSA) and the replacement power in the event of a sudden breakdown to ensure the welfare of consumers are protected,” he explained in an interview.

The unscheduled power outages were equivalent to 1,500 megawatts or equivalent to the capacity of three big power plants.

Thus far, the power plant operators have mostly cited technical reasons for the outages.

“But we are proactively looking into the terms and conditions of their PSA to make sure that the effects of the problems they encounter are not passed on to consumers,” Cusi added.

The investigation, however, will not touch on charges of collusion since this is within the scope of the Philippine Competition Commission.

The probe on the circumstances of the sudden power plant shutdowns are being undertaken with the Energy Regulatory Commission, Cusi said.

“The DoE’s interest is to assure that there are no unplanned outages and that consumers are well protected,” he said.

Quick solutions applied

“We have put into action several immediate remedial solutions to demonstrate the DoE’s firm commitment to protect electricity consumers from the adverse effects of red alerts,” he added.

Aside from looking into the reasons for the unplanned outages and the spikes in electricity spot market prices, DoE is also undertaking a review of “replacement power” and “outage allowance” provisions in PSA between generation companies and distribution utilities to ensure their proper implementation.

However, the DoE recognizes that short-term answers are not enough. Thus, we are taking a holistic approach that focuses on the establishment of institutional solutions that would benefit consumers in the long run, Cusi stressed.

Such approaches are “the continuing implementation of the Retail Competition and Open Access, which is currently subject to a Temporary Restraining Order by the Supreme Court, the creation of a ‘forward market,’ as well as the thorough evaluation of current market price caps. These mechanisms were provided for under Republic Act 9136, or the Electric Power Industry Reform Act of 2001, to facilitate market competition that would provide consumers with a reliable power supply at the least cost,” he said.

The Energy Chief said the DoE fully intends to pursue policy directions to create permanent solutions to the otherwise temporary, yet recurring, challenge of red alerts.

“In this regard, we are calling on the cooperation of all our industry participants and stakeholders for the mutual benefit of everyone,” he added.

DoE meets power players

DoE officials met with power sector representatives from both government and private firms to identify measures needed to ensure supply meets the demand following a red alert notice the other day.

The National Grid Corporation of the Philippines (NGCP) lifted the red alert notice effective 4:46 p.m. last Wednesday but kept a yellow alert until 9 p.m. on that day.

Risks to reserves persist given the high demand during the summer months and the unplanned outage and de-rated capacity of some power plants.

The meetings were made “to coordinate the immediate actions to be made for the sectors’ actions to be synchronized back into the grid,” DoE said.

Wednesday’s supply was reduced by total of 1,352 MW after four power plants went on forced outages.

These are Unit 1 of the 1,200-MW Sual power station in Sual, Pangasinan, which is not operational from 9 to 14 April 2019 due to piping leak on the boiler circulating pump; 2 of the South Luzon Power Generation Corporation (SLPGC), operations of which was stopped last 7 April due to vibration in primary air fan. The SLPGC U2 is expected to go back online on 21 April 2019.

Also, operations of the Unit 3 of the Pagbilao Power Plant in Quezon Province were put on hold last 2 April and this will last until 16 April due to boiler slagging, while Unit 1 of the South Luzon Thermal Energy Corporation is not operating since 20 March and will last until 13 April due to boiler tube leak.

Meanwhile, Unit 1 of the Malaya Power Plant in Rizal is on de-rated situation from its original capacity of 300 MW to just 150 MW because of isolation of high-pressure heater. Unit 2 of the Ca