Power Forum: Can IMEM dampen brownouts during summer?

Nov 25, 2014

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Last November 20, a new bunker fueled power plant was inaugurated in General Santos City that would ensure no brownouts for the Socsargen region during the upcoming Christmas season and on through the hot summer months and beyond.

 

The 20.9MW peaking power plant of Peakpower Socsargen Inc. (PSI)  will supply the peaking power needs of South Cotabato II Electric Cooperative (SOCOTECO II)  in General Santos City, the municipalities of Glan, Malapatan, Alabel, Makungon, Kiamba, Maasim and Maitum in Sarangani and Polomolok and Tupi in South Cotabato.

 

CDO 2nd District Rep Rufus Rodriguez speaks during the House Energy Committee public hearing on the IMEM held March 6, 2014 in Cagayan de Oro City

 

 “This means that the people of Gensan and those within the franchise area of SOCOTECO-II will be able to hopefully have zero brownouts this coming Christmas,” said PSI President Roel Z. Castro.

 

Dr. Walter W. Brown, PSI Chairman, said the plant would provide 20MW of the 120MW peak load of SOCOTECO-II and committed to expand it by an additional 15MW by next year.

 

Modified IMEM can dampen brownouts

 

If Energy Secretary Carlos Jericho L. Petilla manages to have the modified Intermediate Mindanao Electricity Market (IMEM) restored as soon as possible, he is convinced brownouts in most areas of the Mindanao would likewise be eradicated,

 

“Even if the Aboitiz 300MW coal fired power plant becomes operational, not all of it will be directly injected into the grid because around 140MW have been secured by Davao Light which has not been experiencing brownouts and no urgent need for additional electricity like the cooperatives,” Petilla said. “I suspect they will replace their diesel plants with coal fired energy so it’s not sure if there will be any net addition to the grid.

 

“The best way to tap the capacities of these diesel plants is through an electricity market, which we’re saying now is IMEM,” he stressed.

 

“What we want is to make all that capacity available through a market. Problem is we had some problems when we launched IMEM because maraming hindi pagkakaintindihan. Ang problema sa IMEM gicontrahan ni sa mga tawo nga wala man silay labot. Dili sila buyer, dili sila seller. Unsa man sila? Wala lang,” Petilla said in an impromptu press conference following the Peakpower launch.

 

Demand Side Bidding

 

“Now we passed to ERC with major changes you pointed out. Your complaints were actually fair. One of the biggest features to be included in the modified IMEM is Demand Side Bidding,” Petilla said.

 

Under the modified IMEM Rules of Demand Side Bidding, distribution utilities and industries are allowed to post their desired prices for their power needs and if the suppliers can’t meet it, they will not be compelled to buy any electricity.

 

Energy Sec. Jericho Petilla enjoys a light moment with PSI Chair Dr Walter W. Brown & Pres. Roel Z. Castro

 

“If the supply is less than the demand, market should be suspended kasi magkakaipitan sa prices. However, we are implementing demand bidding in Mindanao, walang ipitan ito,” Petilla said, stressing that utilities and industries who insist on their price should have other options ready in case no IMEM supplier picks up their offer.

 

“I just hope ERC will release it before summer when we really need it. We need the support of the coops and industry players to make it happen,” he added.

 

“With demand side bidding, the distribution utilities (DUs) will only get the power at the bid price put out,” commented a power advocate from Zamboanga City who preferred to remain anonymous. “Hence, the DUs are better placed to know how much the additional power is worth to them. Technically, the DUs cannot be complaining of high power prices.”

“Another aspect to the power industry is for the DOE/ERC to implement “open access” for big loaders come 2015 when there will be excess power, and that the big loaders be given a choice of their power supplier (if their respective DUs power cost is higher than what could be bought from the grid from other suppliers),” he added.

 

Merchant Plants

 

Petilla said a restored IMEM would encourage Independent Power Producers (IPPs) like Peakpower to set up merchant plants if they like the way the market is behaving.

 

“While there will be many new plants opening soon in Mindanao, most of them are baseload plants. I’d like to encourage more peaking plants because in the end, you cannot just rely on baseload plants. There will never be enough if there is no demand and you’re left with the peaking part hanging.”

 

“That’s where we are when it comes to the situation in Mindanao. The IMEM will also encourage peaking plants because that’s the way to encourage them,” he added. 

 

Petilla said Mindanao particularly needs an electricity market because every time there’s a shortage of out from its hydroelectric power plants, the Gensan and Zamboanga areas gets to experience rotating brownouts first because electric coops in the area will always be the last to be served and first allocation to be cut.

 

“With the IMEM we are pushing, the dispatch protocol will be documented and evaluated so we can install discipline in the protocol so those at   the end of the line don’t get the short end of the stick,” the energy czar said.

 

“And finally I’d like to tell you the relevance of Peakpower. There are many plants coming in but I’m worried there are not enough peaking plants. In the future we will need many plants across cooperatives because that is the best way to make adjustments when our demand and supply don’t meet each other every now and then.”

 

“I hope we have more plants like this because this is what we really need in this area of Mindanao because our interconnection to either Leyte or Negros will not happen until 2018 at the earliest. I hope we will also have the support of the people of Mindanao when it comes to this.

 

The DOE earlier projected Mindanao to continue suffering from brownouts until new capacities come online in 2015.

 

Based on the Mindanao Power Situation Outlook of the Mindanao Power Monitoring Committee (MPMC), the Mindanao grid will have a projected available capacity of 2,208 MW in 2015, versus a projected peak demand of 1,583 MW. The period 2016-2020 is also similarly projected to result in an excess of available supply versus actual demand.

 

Although the DOE earlier said in its website the Mindanao grid would be ready for WESM operations once new capacities come in by 2015, Petilla said this is not so.

 

Still no WESM

 

“We cannot go to WESM because we don’t have an interconnection between Luzon, Visayas and Mindanao.  If we have a market here, I cannot call it a WESM because it’s actually isolated. The IMEM is almost the same as WESM but will not go outside of Mindanao because there’s no interconnection.”

 

“The difference now is in Luzon there is almost no government plant, here the biggest plant is the government. That’s why we have to put IMEM because there are rules which need to be apply only in Mindanao. And especially what we will put in is the Demand Side Bidding. In Manila you only put your load requirement and take the market price. Here, they are afraid IMEM would make power more expensive.”

 

IMEM Oppositors

 

Oppositors of the IMEM are convinced it would result in unnecessarily high power rates in Mindanao when in fact, consumers can access the same capacities at a much lower prince.

 

“Let me point out that the harmfulness of the IMEM comes mainly from the fact that it will enable the PSALM-NPC to charge the excess generation of the NPC-owned Agus and Pulangi hydroelectric power plants at the IMEM price (which could be as high as the price cap of 42 pesos per kWh), instead of delivering this excess generation to power consumers at the ERC-approved rate (around 3.00 pesos per kWh) for all generation from NPC owned and controlled power plants (which is what is happening now without the IMEM),” said Engr. David A. Tauli, president and spokesperson of the Mindanao Coalition of Power Consumers (MCPC).

 

Rep Ed Masongsong (1-CARE Party List) answers a question during the press conference of the House Energy Committee held March 6 in Cagayan de Oro City. Also in photo is HOR Energy Committee Chairman Rey Umali (center)

 

MCPC is a broad based coalition of private utilities, electric cooperatives, industries, consumers and local government units dedicated to providing cheap, affordable and reliable electricity to power users in Mindanao.

 

“It is this adverse effect of the IMEM that DOE has failed to explain to us on what happens to the excess generation of hydro plants before and after, or with and without, the IMEM,” Tauli added.

 

“Everything that DOE  does is how to squeeze more payments in power from us all, they are not doing anything to improve the Agus – Pulangui complex because there is none for them in there and they want to make it deteriorate further by withholding the maintenance budget to ultimately reduce its overall capacity,” said Engr. Norberto J. Older, president of the Iligan City-based Lanao Power Consumers Federation (LAPOCOF).”

 

“With that, DOE/PSALM can pursue the privatization, at which case, it would still be the Aboitiz or the Alcatraz who are just waiting, that will get them, just like the two power barges.

This modified IMEM is just another (expletive deleted).”

 

“We maintain our strong opposition on the operation of the IMEM until supply exceeds demand,” said Engr. Nestor B. Degoma, chairman of the Power Alternative Agenda in Mindanao (PALAG-Mindanao). “This situation may still to come at the earliest, 2016, when Therma South Inc. and Sarangani Energy will hopefully be on-stream, with their combined capacity addition of 500MW to the Mindanao Grid.”

 

“The best thing DOE could do this 2015, especially during the summer months, is to appeal with Big Commercial and Industrial firms to implement the Interruptible Load Program(ILP) with standby generators/power plants and advice DUs with embedded Power Plant/s and or Modular Genset to prepare and condition their Units for the dry months, rather than prematurely implement IMEM,” he added. 

 

Degoma said some private DUs and rural electric cooperatives in Mindanao already have in place Modular Gensets and or contracted or owned embedded power plants, with a combined capacity of around 200-300MW, that if properly coordinated by DOE could arrest the much-feared power shortage next year.”

 

Meantime, the Association of Mindanao Rural Electric Cooperatives (AMRECO) maintains its opposition to the IMEM centers on the acceptability of its settlement of billings with the electric cooperatives.

 

The IMEM is mandated by DOE Department Circular No. DC2013-01-0001 dated 09 January 2013 pursuant to DOE’s mandate in ensuring reliability, quality and supply of electric power under Republic Act No. 9136 also known as the Electric Power Industry Reform Act

of 2001 or EPIRA.   

 

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