DOE, IPPs move to avert power shortage in Luzon

By Neil Jerome C. Morales, The Philippine Star

Posted at Apr 13 2012 07:00 AM | Updated as of Apr 13 2012 05:49 PM

MANILA, Philippines - The Department of Energy (DOE) and the Philippine Independent Power Producers Association (PIPPA) have lined up measures to prevent a power outage in Luzon in July.

This as power prices will likely spike as the output of three power plants will decline amid the week-long maintenance shutdown of the Malampaya gas-to-power project in northwest Palawan.

“The Malampaya shutdown is something that has been pre-arranged and pre-planned. Adequate plans have been made by various sectors,” said PIPPA president Ernesto B. Pantangco.

“Both DOE and National Grid Corp. of the Philippines (NGCP) already prepared solutions to address the shortfall in generation through the rescheduling of scheduled maintenance of other plants,” said Pantangco.

The DOE, for its part, is looking at the use of other power plants as a contingency measure, said Energy Undersecretary Josefina Patricia M. Asirit.

Industrial fuel oil and natural gas could also be used for the power plants while maintenance works is ongoing, Asirit added.

The Malampaya field fuels three power plants with a combined capacity of 2,700 megawatts (MW), equivalent to about 36 percent of Luzon‘s power generation requirements.

Operator Shell Philippines Exploration B.V. (SPEx) will shut down the facility on July 13-20 for maintenance works.

Officials said the stable power situation in Luzon will not be hampered by the maintenance.

Pantangco said around 300 MW of excess capacity from the Visayas can provide the needs of Luzon. As of yesterday, the Luzon grid recorded an excess capacity of 1,185 MW, data from the NGCP showed.

Pantangco said the rainy season, which will start in July, will result in lower demand and ensure the availability of power from hydroelectric plants.

However, prices of electricity might rise as distributors might be prompted to buy more expensive power.

“There might be a slight spike in Wholesale Electricity Spot Market [WESM] rates only for that period that diesel power plants are running to compensate for the peak demand,” Pantangco said.

“More expensive plants will be coming in to bring supply to the grid,” he added.

On Wednesday, Manila Electric Co., the country’s largest power distributor, said generation charge will go up by 33 centavos per kilowatt-hour (kwh) to P5.66 per kwh for the billing month of April, compared with P5.33 per kwh from the previous month given higher prices from WESM and independent power producers.

Pantangco, who is also the executive vice-president of Lopez-led First Gen Corp., said the 1,000-MW Sta. Rita and 500-MW San Lorenzo power plants in Batangas both have fuel stock that could last for 30 days. The two plants are owned by First Gen.

But the 1,200-MW Ilijan natural gas power plant of SMC Global Power Holdings Corp. in Batangas only has a fuel stock good for seven days, Pantangco said.

The Malampaya consortium for Service Contract 38 is composed of SPEx as the operator, Chevron Malampaya LLC with a 45-percent stake and state-led Philippine National Oil Co.-Exploration Corp. (PNOC-EC) holding the remaining 10 percent. The license for SC 38 that allows the exploration of the Malampaya gas field in northwest Palawan will expire in 2024.