Philippine Star: Senate panel still not convinced on emergency powers

By Alexis Romero (The Philippine Star) | Updated September 26, 2014 – 12:00am

MANILA, Philippines – The Senate committee on energy is not convinced of the need for President Aquino to exercise emergency powers to address a looming energy shortage next year.

Committee chairman Sen. Sergio Osmeña III said there are cheaper ways to deal with the supply shortfall, other than empowering President Aquino to forge expensive contracts for additional generating capacity.

“I’m not amenable to that and I will recommend to the members of the committee that the alternative is much cheaper, less risk and better for the country,” Osmeña told reporters after the first committee hearing on the issue yesterday.

This developed as Energy Secretary Carlos Jericho Petilla warned of rotating blackouts lasting for one to three hours in Luzon next summer if the government fails to contract additional capacity.

Petilla raised the warning during the hearing.

“My recommendation to the committee members is to study it some more. But if I have to decide today, I would not give it (additional authority) to him,” Osmeña said.

“What I will recommend to the committee members is to pay for the extra power of those who own power generator sets in order for them to pay for their fuel,” Osmeña said.

“You do not need to contract but you have to pay the ILP participants,” Osmeña said.

He also said three power plants in Batangas and Ilocos Norte are expected to be operational next year and can provide up to 385 megawatts to the Luzon grid.

Early this month, President Aquino requested Congress to provide him additional authority to allow him to stave off a power shortage next year.

Aquino called for the immediate enactment of a joint resolution allowing him to establish additional generating capacity.

He said the energy department is expecting a “critical electricity situation” in the summer of 2015 due to the expected effects of the El Niño phenomenon as well as delays in the start of operation of “committed power projects,” among other factors.

“There is no gain saying that the imminent electric power shortage during these months is a real threat to the country’s growing economy and the general welfare of the people,” Aquino said in a letter to Congress dated Sept. 12.

“The speedy enactment of the joint resolution will ensure the energy requirements of the country for this critical period – through a specific, focused and targeted acquisition of additional generating capacities for use during the limited periods of time of very tight energy supply,” he added.

Section 71 of the Electric Power Industry Reform Act (EPIRA) states that upon the determination by the President of an imminent shortage of the supply of electricity, Congress may authorize, through a joint resolution, “the establishment of additional generating capacity under such terms and conditions as it may approve.”

Not Congress’ fault

Some lawmakers have expressed reservations over the President’s request, which they claimed was too broad.

They also vowed to scrutinize the request to determine how much it would cost the government and taxpayers.

Osmeña said it is not Congress’ fault if the government is experiencing time constraints as he has been warning executive officials of an imminent power shortage since 2011.

He said he doubts if the joint resolution the President is requesting could be approved next month.

“It’s really difficult. This is so complicated,” Osmeña said. “We also have to help inform our members and educate them on how the power industry works.”

Under the draft joint resolution, the government may enter into negotiated contracts to acquire additional generation capacity.

Petilla said they are eyeing negotiated deals because there is little time to undertake public bidding. Osmeña, however, insisted that a public bidding should not be done away with.

“I am for public bidding. Everything should (undergo) public bidding,” he said.

“In terms of costing and supply, they know the situation. They will weigh on it,” the energy chief said.

Businessmen who attended the hearing vowed to help the government prevent a power crisis.

“In the private sector, what we’re planning to do is help expand the ILP and also increase power supply agreement so we can mitigate the impact,” said Peter Perfecto, executive director of the Makati Business Club.

“If we contract the additional capacity, that may cost the consumers more. We’re trying to make our contribution to make sure that whatever mitigating action we take will not cost the consumer much more,” he added.

Blackouts

Petilla said massive power outage across Luzon is inevitable if no additional capacity is generated.

“There are seven to eight weeks of red alert in the summer and (when there’s red alert), there’s brownout,” Petilla told the committee.

Petilla was responding to a question from Sen. Ralph Recto on the worst-case scenario if Congress thumbs down the request for special powers for the President.

A red alert means severe power deficiency while a yellow alert means reserves are below the minimum level set by the regulator.

Yellow alert is raised when the total reserve is less than the capacity of the largest plant on line. For the Luzon grid, this is usually equivalent to 647 MW, or one unit of the Sual Power Plant.

Citing data from the National Grid Corp. of the Philippines (NGCP), Petilla said that a red alert status for the summer of 2015 would start in the last week of March, with projected net reserves of only 113 MW, and last until May.

There will also be red alert in the first and second weeks of April with net reserves at 308 MW and 377 MW, respectively, and in all four weeks of May with projected net reserves at 55 MW, 139 MW, 219 MW and 201 MW, respectively.

The scenario takes into account reduced output of hydropower plants as well as the maintenance shutdown of the Malampaya natural gas facility.

However, when asked how much prices would increase, Petilla said electricity prices are not expected to go up because during red alert status, trading at the market is suspended.

Furthermore, he said there is already a secondary cap at the Wholesale Electricity Spot Market (WESM) that would help temper power prices. – With Jess Diaz, Iris Gonzales