Power utilities choose brownouts over high prices

By Myrna M. Velasco – February 18, 2020, 10:00 PM
from Manila Bulletin

During extremely tight demand months of summer, power utilities indicated that it could be a ‘less evil act’ for them to commit their customers to rolling brownouts, instead of punishing them to pay exorbitant electricity bills because of high-priced contracts that they will procure for peaking capacity.

According to National Electrification Administration (NEA) Chief Edgardo Masongsong, some electric cooperatives are inclined at just resorting to short-term power interruptions, because contracting for peaking capacity during the summer months could come at very high costs for consumers.

“Sometimes, if the ECs will contract for embedded capacity to meet higher demand for summer, these are offered at 10 to 15-year contracts, so they will have impact on electricity prices and they can come very expensive,” he said.

So instead of cornering high-priced contracts, he noted that distribution utilities will just painstakingly take the pain of enforcing interruptions on electricity service of their end-users.

He explained that contracted peaking capacity could be underwritten long-term, but this is just often used for several days during the summer period. And the rest of the year, the consumers are left without choice but to pay higher rates because of such contracts.

“It will always be more expensive – because whether you use it or not, you will still pay for (CRF) cost recovery fee because that is provided under the contracts,” Masongsong stressed.

With scorching weather from March to June this year that will then drive up electricity demand, Masongsong warned that the consumers of electric cooperatives could be plunged into dreaded power interruptions of one-hour duration at each area where manual load dropping will be implemented.

That is based on forecast set out by the Department of Energy (DOE) that the high-demand periods of April and May could unceremoniously lead to red alert or roughly zero reserve in the power system at best; or rotating brownouts at worst.

There had been projections of more than 800-megawatt shortfall in supply during the summer months; and if such predicament in the system would be worsened by sudden forced outages of power plants, the unwarranted outcome will be brownouts.

Contingency measures are being pressed across chains of the industry, but there are no certainties that proposed alternatives will work as they are needed by the power system – similar to the strains that Luzon grid had suffered from last year.