House Energy Committee proposes cheaper ILP to address looming Luzon power shortfall

Dec 12, 2014

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The House Committee on Energy is championing a much cheaper alternative to what the Department of Energy is proposing to address the expected power in Luzon next year.

Better still, it figures not to be a burden on consumers.

 

The ceremonial switch on of the Peakpower San Francisco Inc. (PSFI) peaking plant with ASELCO GM Emmanuel Galarse, San Francisco SB member Neresa De Leon, Rep. Edgardo R. Masongsong (1-CARE Party List), Agusan Sur District II SP Member Edward P. Mellana, ASELCO Board President Corazon D. Cullantes, and PSFI President Roel Z. Castro. PSFI & A. Brown Company Inc. Chairman Dr. Walter W. Brown applauds in the background while PEI VP for Marketing & Regulatory Edgardo Calabio is at the podium. (photo taken from the ASLECO FB Timeline)

“I was the first to react to the proposal to give the president emergency powers to enable him to purchase an additional 300 megawatts of electricity for PhP 6-12 billion which could be an added burden to the people,” said Rep. Edgardo R. Masongsong (1-CARE Party List) during the Dec. 8 inauguration of the new Peakpower Energy Inc. 5.2MW peaking plant for the Agusan del Sur Electric Cooperative Inc. (ASELCO) in San Francisco, Agusan del Sur where he was the keynote speaker.  “I offered ILP or the Interruptible Load Program as a solution which would only cost a maximum of P450 million and will not have pass-on costs to the consumers.”

Filed by the Speaker and the House majority floor leader and members of the Joint Congressional Power Committee (JCPC) House Joint Resolution No. 21 authorizes the president to procure power through the ILP and order the fast tracking of new power plants due to be commissioned after the summer of 2015 to earlier than March 2015 in preparation for the thinning reserves.

Masongsong moved for the approval the measure which provides that once Luzon power grid’s reserves are threatened, the standby generating sets of commercial/industrial consumers in Luzon and Metro Manila can be tapped through the ILP. Instead of passing the cost to the consumers, the President is authorized to allocate funds to pay for ILP participants for the cost of running their gensets.

“In this manner, government will pay the ILP program participants and not pass on the burden to the consumers. ILPI costs something like 60 centavos per KwH,” he added.

Unlike the ILP in Mindanao and the Visayas which are implemented under normal conditions for which the consumers are billed the cost of the program, Masongsong said the ILP in Luzon would be limited from  March 1, 2015 until July 31, 2015 so massive brownouts in Luzon can be avoided by authorizing the President to contract out the ILP.

“This should serve as a precedent so that if a power shortage ever this happens again in the Visayas and Mindanao, we can cite this as an antecedent,” he explained.

If only commercial and industrial establishments that are based in the metropolitan cities like Davao and Cagayan de Oro and maybe Butuan, are convinced by the DUs and coops to participate in the ILP, then the existing power supply from PSALM can be used for the rural areas, Masongsong added.

During eight technical working group meetings conducted by the House Energy Committee with stakeholders across Luzon, Masongsong said it was determined that Metro Manila has approximately 1,944MW which can be tapped for ILP. For the entire Luzon, over 3,600MW is available while an estimated 1,000MW can be tapped in Mindanao for the program.

 

Hon. Edward P. Mellana, SP 2nd District representing Gov. Eddiebong Plaza cuts the ribbon with the assistance of Peakpower Energy Inc. Chair Dr. Walter W. Brown, ASELCO Board Pres. Corazon D. Collantes, Rep. Edgardo R. Masongsong (1-CARE Party list) and PEI President & CEO Roel Z. Castro (photo by Mike Baños, NPN)

Following the approval of the measure on its third and final hearing Wednesday, December 10 by the Lower House,  Masongsong hopes the Senate version can also be passed by the Upper House.

“Definitely it has to be passed by December before we take a Christmas break since it mandates the President to contract out the participants to the ILP until December 31, 2014. So those who choose to run their gensets during the summer months but are not ILPI participants will not be refunded their costs of fuel and operations,” he added.

“We are allocating PhP 450 million which is reasonable enough compared to the PhP6-12 Billion being proposed by the DOE,” Masongsong said.

However, he clarified that the fund cannot be used if there would be no shortage in terms of thinning reserves. So if the ILP will not be implemented, the amount would only serve as a contingency fund for that eventuality.

“The House Joint Resolution will serve as the guidelines for the ILP although the DOE is still expected to come up with the Implementing Rules and Regulations (IRR) once this is passed,” he added.

Still another measure proposed by the solon was for embedded power plants to be contracted out by the utilities since almost all of the utilities and electric cooperatives have no contracts for replacement power.

“By proposing an embedded generation like this we cut down on transmission costs and the cost to the consumer will not increase. Peaking plants with a load factor of 30 percent running 5-6 hrs a day during peak demand does not significantly affect the price of power for the consumer,” Masongsong said.

The solon proposed that all distribution utilities, whether private or electric coops, should emulate what ASELCO has done by contracting with Peakpower for embedded generation of peaking plants to address the shortfall during peak demands.

He cited how Mindanao already has 101MW capacity of diesel/bunker fueled peaking plants which will be operational by year end.

“We have been unjustly accused of being responsible for the power crisis in Mindanao by not forecasting correctly and not providing for future increases,” Masongsong said. “But the coops by themselves have already provided 101MW additional peaking capacity even before the new capacities from coal-fired baseload plants are rolled out by 2015.”

He further suggested that DUs like Meralco, instead of entering into PSA with Independent Power Producers (IPPs) for replacement power, instead contract out for an embedded power plant like ASELCO.

“Current PSAs of DUs do not provide for replacement power, perhaps because of WESM. But in the absence of WESM or replacement power, the answer would be an embedded generation plant for peak power demand.”

 

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