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DoE may limit power contracts to 70% of plant capacity

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THE Department of Energy (DoE) is drafting rules that will cap the energy contracted by power plants to just 70% of their installed capacity, leaving a sufficient buffer for use as replacement power to replace the supply lost during unscheduled or unplanned facility outages.

“We have to encourage the plants to be well-maintained. And how do we do that? We’re looking at a 70% cap of their contracting with distribution utilities so that they can have more power available for replacement power, for power available for ancillary services and more power available in the spot market,” said Energy Undersecretary Felix William B. Fuentebella in a news conference on Wednesday to present energy stakeholders’ assessment of the power situation during the election period.

He said the cap would ease the usage of a plant akin to a vehicle at cruising instead of maximum speed. He said other jurisdictions have adopted a similar policy.

Sobrang minamadali na (It’s being rushed). ASAP,” he said, when asked when the circular is expected to take effect.

He said in the next three months, the rules should have gone through a focus group discussion, the drafting of the circular, a public consultation, the incorporation of comments, and promulgation.

Mr. Fuentebella said the application of the circular is prospective, but contracts that are up for renewal will be covered. He could not immediately assess what percentage of capacity has been contracted by power generation plants.




“I would assume everyone is fully contracted,” said Raymond R. Roseus, Aboitiz Power Corp. vice-president for industry relations, when asked to comment on the DoE’s planned circular.

“Just like any draft, they come up with a program. They consult, it’s subjected to debate. I cannot comment yet because we haven’t fully seen the draft circular,” he said.

“We always try to look at everything first before we give our formal position.”

He said fully contracting power capacity remains the assumption when building power plants.

The DoE’s proposed circular comes at a time when the grid is expected to continue experiencing thinning power reserves as demand rises while power plants report unplanned outages.

“Projection-wise, [the situation will normalize in] September,” said Fidel L. Dagsaan, Jr., National Grid Corp. of the Philippines (NGCP) power network planning senior manager for system operations.

On Wednesday, grid operator NGCP placed the Luzon grid on yellow alert after the unplanned outage of Bacman Energy, Inc.’s unit 1 and GNPower Mariveles Coal Plant Ltd. Co’s unit 1, reducing available capacity by 60 megawatts (MW) and 316 MW respectively.

Seven other plants were de-rated or were not operating at full capacity. Most of them are hydroelectric power facilities. In all, the de-rating cut available capacity by 842 MW more.

The yellow alert notice, which was expected at 1-5 p.m. and again at 6-7 p.m., was issued as total available capacity was placed at 11,749 MW while peak demand was at 11,024 MW.

Normal operations require a regulating reserve equivalent to 4% of peak demand or 441 MW, plus dispatchable and contingency reserves at 647 MW each, which is equivalent to the capacity of the Sual power plant’s two units in Pangasinan.

Yesterday’s available capacity left a net operating margin of just 264 MW when the reserves were factored in.

Mr. Dagsaan said the Luzon grid is expected to experience next week its peak demand, which was previously projected at 11,403 MW. That number may not be breached, he said. He placed available capacity next week at 12,171 MW. So far this year, demand in the main island peaked at 11,074 MW, which was hit on May 2.

During yesterday’s press conference, the energy stakeholders described the power situation during the election season to be generally “uneventful.” — Victor V. Saulon