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Not enough time to buy more power -- Aquino

Posted on October 29, 2014

TIME HAS RUN OUT for the Executive to contract additional generating capacity to address a power shortage looming in Luzon in summer next year, President Benigno S.C. Aquino III told top officials of electronics firms in the country yesterday, signaling he doubts the remaining options would suffice to plug the deficiency.

Mr. Aquino noted it takes about six months to lease and prepare generating units, and that Congress has yet to approve the joint resolution that would grant him additional powers to do so with the power shortage less than five months away.

“One of the things that we asked from Congress was the ability to contract two or three generating plants we could rent,” Mr. Aquino said during the open forum of the general membership meeting of the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) at The Peninsula Manila hotel in Makati City.

“Unfortunately, there is a need of six months to install these facilities to include all of the civil works attendant to it -- fuel tanks, the ports that will service, etc. Congress has not given us that power as of yet and, of course, the emergency period or the critical period is from March, April, May, June and July next year,” he noted.

“So, that doesn’t seem to be an option at this point in time.”

Hence, Mr. Aquino said, the government will now focus on its other options which include the Interruptible Load Program (ILP), energy conservation measures and running old, reconditioned but workable plants, although he was unsure whether they would be enough to plug the power shortage.

He added that the government has also sought to reduce consumption by distributing 8.6 million more efficient bulbs.

“Congress and some members of the private sector are very, very inclined to just utilize the so-called Interruptible Load Program,” Mr. Aquino said.

“My caution was these backup generators are precisely that -- backup generators -- not base-load plants, and there is no assurance,” he added.

“I’m just trying to give you the picture as I see it so as not to raise false hopes. The reason we wanted the plants, the base-load plants, was precisely because they have demonstrated capability to produce the attendant power. Unfortunately, the cost is also high, but it is better to have and not need than to need and not have,” he continued.

“Unfortunately, others are taking a more optimistic look that the ILP will suffice to carry us through.”

Mr. Aquino said he hoped Luzon “will have all the necessary power” with “all of these steps that are being undertaken... and hopefully we will have a mild or non-existent El Niño situation next year” that will otherwise leave no water to run hydroelectric plants.

The Department of Energy (DoE) earlier projected a 900-MW deficiency in a worst-case scenario that could strike Luzon in the second week of April next year, but later revised the power outlook to show the island -- which is estimated to contribute 70% to gross domestic product -- would need at least 678 MW -- covering both shortage and minimum reserve.

Mr. Aquino last month formally asked Congress for additional options in the face of the looming problem, invoking the crisis provision of Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001. That, in turn, set legislative wheels in motion to approve the envisioned joint resolution.

Proponents in Congress had earlier committed Oct. 29 for approval of the resolution that would give the Executive from March to June next year an arsenal of options ranging from an intensified energy conservation program to temporary acquisition of additional megawatts to plug the gap, but later moved the deadline to Dec. 1 instead.

This, following statements by DoE officials that the Executive may rely primarily on the ILP and the power crisis may not need as much state intervention as earlier believed.

Malacañang has since insisted it still wants to be able to acquire additional megawatts to bridge an energy shortage expected to strike Luzon in summer next year, fearing capacities among private firms with generator sets may not be enough to cover the gap.

At the same time, Congress is looking at a “carrot-and-stick” scheme to encourage more companies to join the ILP.

House of Representatives Energy committee chairman Rep. Reynaldo V. Umali of Oriental Mindoro (2nd district) said in a phone interview yesterday that provisions of the draft joint resolution include value added tax relief for companies that take part in the ILP.

“We are giving companies until Dec. 1 to register with the ILP. The carrot that we will be offering is that they will be paid for the additional expenses that they will incur from running their own plants, and the stick is that companies may be asked to run their own capacities and not get paid,” he said.

Mr. Umali also said Congress is “very confident” the remaining options -- ILP, energy conservation and efficiency measures, and running plants up for rehabilitation -- will be enough to bridge the energy gap next year.

Sought for comment yesterday, Senate Energy committee chairman Sen. Sergio R. Osmeña III -- who had said earlier that ILP alone could plug the looming deficit -- said in a text message: “If they’re [Executive] using their heads, they should pick up more than 500 MW thru ILP and RESA [Renewable Energy Supply Agreement] and tweak another 800 MW from existing plants.”

Business leaders also remained confident the ILP would be able to address the potential energy crisis next year.

“There is enough time to rev up more participation for the ILP,” Makati Business Club Executive Director Peter Angelo V. Perfecto said in a text message.

“Other companies are hesitant simply because they do not understand the terms of the engagement,” he added.

“Moreover, government must lead in an aggressive, no-nonsense energy conservation program to further ease demand on the grid during peak hours especially in times of red alert (when demand outstrips supply, including reserves),” Mr. Perfecto stressed.

“Finally, government must also lead in the crafting of a multi-stakeholder, longer term and sustainable energy security plan so that we can stop this cycle of energy gaps every three to five years.”

European Chamber of Commerce of the Philippines Vice-President Henry J. Schumacher said via text: “We maintain that the private sector can become part of the solution to address the power crisis through ILP and energy savings/efficiencies.”

“We are pretty confident that 700 MW can be achieved through ILP. On energy savings and energy efficiency, we can achieve 400 MW if we stand together and invest in lighting (LED), new aircon systems with high-efficiency motors now.”

Management Association of the Philippines President Gregorio S. Navarro, in a separate text message, said “the government should aggressively pursue the ILP and demand-side power saving measures to address the power shortage. Businesses and the public should be incentivized to adopt/support these schemes.”

John D. Forbes, senior adviser of the American Chamber of Commerce of the Philippines, said separately: “If generation capacity will not be contracted by the government, Luzon grid consumers will have to follow efficiency and conservation measures, the ILP program must be maximized and peaking plant owners paid enough to operate plants profitably.” -- Imee Charlee C. Delavin