Meralco warns of blackouts in Luzon

By Donnabelle Gatdula, The Philippine Star

Posted at Jan 31 2013 08:25 AM | Updated as of Jan 31 2013 06:55 PM

MANILA, Philippines - Expect frequent blackouts across Luzon beginning this year if no new sources of power are established to support the country’s economic growth, Manila Electric Co. (Meralco) chairman Manuel Pangilinan said yesterday.

“We do need more power plants in the country. The margin of (supply) safety in Luzon is very tight, and unless we fire up our oil-fired plants, we will experience brownout in Luzon,” Pangilinan said during a roundtable discussion at the Philippine Economic Summit 2013.

Meralco president and chief executive officer Oscar Reyes said the power firm recorded 7.1 percent growth in sales as of end-2012 on higher revenues from industrial, commercial and residential customers.

Industrial, commercial and residential sales volume grew by about 11 percent, six to 6.5 percent, four to 4.5 percent, respectively, from the previous year.

With this growth momentum, Reyes said “we anticipate that there would be increasing tightness in 2013-2016 until new power generating plants come in.”

Reyes said the government – in its Philippine Energy Plan – sees the need for additional energy capacity of 3,000 megawatts capacity in the next five years, taking into account a growth of only 4.5 percent.

“So there would be shortfall,” he said, noting that building a power plant usually takes three to five years.

Economic guru Nouriel Roubini noted in the summit that the country’s GDP is likely to grow by 6.5 percent in 2012 and seven percent in 2013.

To ensure sufficient and adequate supply of power in its franchise area, Meralco entered into long-term bilateral contracts involving 2,880 MW. Many of these contracts will replace expiring ones with the National Power Corp.

Meralco is also putting up its own power plants with total capacity of about 2,900 MW from 2016 to 2019.

These new capacities will include 600 MW in Subic, 1,700 MW liquefied natural gas (LNG) facility in Quezon/ Batangas, and 600 MW baseload facility in an undisclosed location.

The new plants would represent 30 percent of the total power requirement of Meralco and the remaining 70 percent would be sourced through bilateral contracts with other power producers.

Philippine power producers have been urging the government to assure sufficient supply of reliable and competitively priced power in anticipation of increase investments in the country.

“Given the latest developments, it is already necessary to put up the necessary infrastructures that will secure the continuous supply of electricity,” Philippine Independent Power Producers (PIPPA) president Ernesto Pantangco said, referring to the country’s economic gains.

“An unreliable power system charging high energy costs dissuades investments and investors both in the short and long-term. Baseload power plants that run on coal or natural gas produce energy at a constant rate, usually at a more competitive cost relative to other power facilities available to the system,” he said.

According to the Department of Energy (DOE), the current electricity consumption rate in the Luzon grid means that three new 600-MW power plants have to be in service every year from 2015 to 2017.

The Philippine Energy Plan states that 11,000 MW in additional capacity is needed until 2030. This projection is based on a 4.79-percent annual growth in energy demand.

Currently, the country only has 13,000 MW in dependable capacity.

The association of power generators is also pushing for the diversification of fuel sources to balance the overall energy mix.