ERC readies contingencies

Tight power supply seen

By MYRNA M. VELASCO – February 5, 2020, 10:00 PM
from Manila Bulletin

With highly probable rolling brownouts hitting Luzon grid as early as March with ensuing price spikes, the Energy Regulatory Commission (ERC) bared that it has been prepping for measures to ensure that supply as well as rate hikes on consumers would be mitigated.

ERC Chairperson Agnes T. Devanadera told reporters that the Department of Energy (DOE) already informed them of a “very tight supply” that will be straining the country’s main power grid during the peak demand months of summer. Based on the department’s forecasts presented to industry stakeholders, she noted that the scale of supply shortfall could be as high as 1,800 to 1,900 megawatts at the peak of summer.

“The DOE already told us… at first, we thought that extremely tight supply will just strike in May, but now they’re saying it could happen as early as April or even latter part of March,” the ERC chief stressed.

Taking cue from that, she noted that the regulatory body had sorted out contingencies that could help shore up supply during the critical months of March to June – and the other facet of that, is tempering highly probable hikes in electricity rates.

Devanadera said the prevailing secondary price cap of ₱6.245 per kilowatt-hour (kWh) for traded capacity in the Wholesale Electricity Spot Market (WESM) will be continually enforced, because this could cushion spikes in spot-procured capacities.

“The existing secondary price cap is still there and it has helped control the prices, but whether or not it’s time for us to change, it is something else,” she said.

Additionally, the ERC chairperson indicated that they had instructed generation companies (GenCos) and distribution utilities of which power supply agreements (PSAs) had been affected by last year’s Supreme Court decision on the competitive selection process (CSP) policy not to stop on their off-take (capacity purchase) arrangements.

But she qualified these supply deals must be carried out while the DUs comply with the mandated CSP or competitive auction on their PSAs.

Devanadera said if the 153 PSAs affected by the SC decision would stop supply to the distribution utilities (DUs), this will result in 1,000 megawatts of capacity being taken out from the system and this could have sweeping consequences amid the threats of summer brownouts.

“They (affected PSAs) are required to do the CSP, but they should continue supplying because if they will stop, that’s 1,000MW on top of the real shortage… so as a matter of policy, we told them don’t stop your supply while you’re doing your CSPs,” Devanadera noted.

One of the contentious concern being raised by the DUs, she said, is whether or not they will secure CSP exemption from the DOE given the anticipated “state of emergency” that the power system would need to grapple with during the summer months.

The ERC chief noted though that such policy will be a matter to be decided by the energy department, and the regulatory body can only extend imprimatur on the continued supply flow between the concerned power generation firms and the DUs they have been supplying to.

Devanadera said another critical measure the Commission has been working on is “fast-tracking the approval of the COCs (certificates of compliance) so the plants can operate.”