ERC in consultations for proposed measures to deal with Malampaya shutdown in Feb.

By Ashley Erika O. Jose – December 25, 2022 | 7:45 pm
from Business World

BW FILE PHOTO

THE ENERGY Regulatory Commission (ERC) said it is currently in consultations to come up with measures that will mitigate the scheduled Malampaya gas field shutdown in February, and will announce proposals shortly.

ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said in a message to BusinessWorld Friday: “We are exploring various measures with the help also of other agencies. We will provide an update once consultations are completed.”

In a virtual briefing on Friday, Energy Secretary Raphael P.M. Lotilla said that the Malampaya gas-to-power project will go on maintenance shutdown between Feb. 4 and 18.

The Malampaya gas facility supplies natural gas to power plants supplying Manila Electric Co. (Meralco), the largest power distribution company and the largest private-sector utility in the Philippines. During the two-week shutdown, Mr. Lotilla said in the interim,  these generation facilities will have to run on more expensive alternative fuels.

Currently, about 20% of the country’s total power requirements and 27% of the Luzon grid are serviced by the Malampaya gas field. The DoE said that at least five power plants with a combined capacity of 3,453 megawatts (MW) are currently supplied by Malampaya.

Rowena Cristina L. Guevara, DoE undersecretary, said to ensure the continuous supply of power, the department has designated a “must run” plant, which refers to power plants that must supply power to the grid under all conditions.

The DoE has also ordered the National Grid Corp. of the Philippines (NGCP) to fast-track the completion of transmission lines on the Luzon power grid and to implement a day-ahead announcement of red and yellow alerts.

Ms. Guevara added that the DoE will also be monitoring Meralco, other utilities and retail electricity suppliers to activate and expand their interruptible load program (ILPs).

ILP participants are large power users that have their own generating facilities. These entities stop drawing power from the grid for a time by tapping their own generators, to reduce the overall demand on the grid. Meralco mobilizes its ILP participants when a red alert is declared by the grid operator, reducing electricity drawn from the system.

“We have already done the forecast for next year; we had a conversation with the NGCP and we considered there will be a generation margin in February, so we are not worried about this part. But we are more worried in summer — April to July,” Ms. Guevara said.

Ms. Guevarra said that the scheduled maintenance shutdown was originally planned for October, but was postponed because of pandemic travel restrictions.

“This time it has to be done because if we delay it further until summer perhaps the facility will not run the way it was supposed to run,” she added.

While the Malampaya shutdown will not result in tight power supplies, Mr. Lotilla said that high power prices are expected during the maintenance period.

“As we have seen in the past, there’s increase in power rates because alternative fuel typically costs more. We pray and hope that international prices of liquid fuel go down in February,” Mr. Lotilla said.

Terry L. Ridon, convenor of think tank InfraWatch PH, said in an e-mail Friday that DUs should be able to mitigate the impact of electricity prices particularly from the spot market.

“As this is a scheduled maintenance shutdown, distribution utilities should be able to forecast at an earlier time whether additional contracted supply may be undertaken during the shutdown period, if this means lower prices than the spot market,” he said.

Separately, Center for Energy, Ecology, and Development (CEED) headed by its executive director Gerry C. Arances said in a message to BusinessWorld on Saturday that the DoE should have safeguards against higher power rates.

“We cannot rely on Malampaya as it is about to run out. It’s not apparent that DoE made sufficient provisions for this. What we do know is that we will once again face blackouts or ridiculously high prices due to our government’s reliance on unreliable and expensive fossil fuels,” CEED said in a message.

Ahead of the dry season, Ms. Guevarra said that the Hermosa-San Jose 500-kilovolt (kV) transmission line in Bataan will be ready by the end of March which is expected to support stranded power capacity.

“By next year also, the trial run of the reserve market will start. We did not have ancillary services (AS) because we did not have a market. The hope is we will encourage more ancillary services to come in,” she added.

Ancillary services are reserve power tapped by the power grid when baseload power declines.

Ms. Guevara said that the DoE is also expecting some power plants to start connecting to the grid in 2023.

“The most important thing of course is for us to have power. We will find ways to deal with the price, I know the ERC is looking at ways of doing this,” Mr. Lotilla has said.

In a briefing last week, Ms. Dimalanta said that the ERC is working to defer the recovery of P22.64 billion in power generation costs after the Supreme Court upheld a ruling that Meralco can implement a staggered rate hike.

Ms. Dimalanta said that the ERC is working to postpone recovery until the second half of the year because of the anticipated power price increases in 2023.

The staggered rate increase resulted from an SC ruling  upholding a 2013 decision by the ERC allowing Meralco to implement a rate increase after a shutdown of Malampaya and the scheduled maintenance at other power plants.