PNoy: Emergency powers resolution urgent

By RG Cruz, ABS-CBN News

Posted at Dec 02 2014 08:28 PM | Updated as of Dec 03 2014 04:28 AM

MANILA – President Aquino certified as urgent House Joint Resolution 21 that authorizes him to contract additional generating capacity to address a power crisis in Luzon in the summer of 2015 just as the House of Representatives began plenary deliberations on the proposed measure.

With 178 congressmen in plenary, House energy committee chairman Reynaldo Umali sponsored the measure.

"House Joint Resolution 21 is not a resolution that will let the country spend P6 billion to P12 billion to acquire additional modular gensets. It will not even add a single centavo to electricity bills, rather this is the most cost effective piece of legislation formulated to respond to looming power crisis. This resolution is the consensus efforts of all private and public sectors to save this country from a looming power crisis," said Umali.

Instead of purchasing or renting additional power generating capacity, HJR 21 relies on the interruptible load program (ILP) wherein the self-generating facilities of private companies are tapped to supply power in exchange for the reimbursement of their expenses.

The resolution stems from a letter of President Aquino requesting for the additional powers.

Under the ILP, companies who fail to register with government for participation in the ILP by yearend 2014 will be entitled to reimbursements should they be tapped. Those who fail to register may still be tapped but won’t be reimbursed.

This prompted a congressional resolution from House Speaker Sonny Belmonte and Majority Leader Neptali Gonzales directing the energy panel to probe the need for emergency powers.

It was revealed during the hearings that on week 14 of 2015, there will be a maximum projected shortfall of 1,004 megawatts, of which 600 is required to meet the dispatchable reserve and 404 megawatts for the required contingency reserve. There is a total of 4 weeks of yellow alert for that period.

"In the October 20, 2014 committee hearing, DOE presented a Luzon Supply-Demand Outlook showing that the highest deficits of 21 and 31 MW on the net reserve would occur only on the 14th week. The NGCP clarified that this translates to a one-hour brownout per day, one day per week. It was also established that the DOE estimates an additional capacity of 678 MW would be needed to cover the contingency reserve requirement during this critical period, prompting the DOE to withdraw the option to lease or purchase generating sets provided that there will be an additional 700 MW of de-rated capacity from the ILP, on top of the other options available viz, (1) fast-tracking of committed plants for interconnection (2) and immediate rehabilitation, (3) and the energy efficiency and conservation program. Accordingly, the Committee was constrained to limit the options to the foregoing, exclude the option to lease or purchase of generation sets, thereby eliminating the sense of urgency of approving the Joint Resolution within the month of October."

Umali told the plenary, starting at 115 MW, commitments under the ILP reached 757.48 MW, and this became possible through the pro-active participation of the customers under Meralco, Retail Electricity Suppliers Association (RESA), and Philippine Economic Zone Authority (PEZA).

These groups even sponsored the ILP Forum and Summit towards the end of October 2014 to encourage all their customers to be part of the solution to the imminent power shortage in Luzon in 2015.

The ILP involves the contracting by the distribution utilities of embedded self-generating facilities (SGFs) owned by large industrial and commercial establishments when they are de- loaded from the grid in case of a red alert situation in the grid, so they can run their own generating facilities. Under this program, the ILP participants, once tapped to run their generating units, shall be compensated for the fuel and maintenance costs of running their units.

"We were also able to identify additional generating capacities and these include JG Summit Holdings, Inc (40 MW), Botocan (20.8 MW), Millenium Energy - Limay (36 MW), Majestic - Solar-Cavite Eco Zone (21 MW), Bauang Rehabilitation (20 MW), Avion (100 MW), Petron - Limay (10 MW), Aaltafil (90 MW), and Millenium Energy - Navotas (100 MW). Also, the High Voltage Direct Connection (HVDC) between Luzon and Visayas Grid of 80 MW."

Accordingly, the HJR 21 provides the following terms and conditions:

1. The DOE is mandated to administer and implement remedial measures under the HJR 21 to compensate only the actual energy generated to address the power shortage;

2. The DOE should ensure that additional generation capacity shall be available on or before 01 March 2015 to ensure that the projected power shortage from March to July 2015 will be properly addressed.

3. Additional generating capacity shall be sourced primarily from the Interruptible Load Program (ILP), fast tracking of new committed projects, and plants for interconnection and rehabilitation; and

4. Adoption and execution of Energy Efficiency and Conservation measures shall be pursued vigorously in both public and private sectors.

Umali spelled out The Terms and Conditions of the House Joint Resolution:

1. The DOE is mandated to administer and implement remedial measures under the HJR 21 to compensate only the actual energy generated to address the power shortage;

2. The DOE should ensure that additional generation capacity shall be available on or before 01 March 2015 to ensure that the projected power shortage from March to July 2015 will be properly addressed.


3. Additional generating capacity shall be sourced primarily from the Interruptible Load Program (ILP), fast tracking of new committed projects, and plants for interconnection and rehabilitation; and

4. Adoption and execution of Energy Efficiency and Conservation measures shall be pursued vigorously in both public and private sectors.

As we deem it necessary, the measures to be undertaken include:

1. Temporary suspension of pertinent laws, rules, and regulations for the Wholesale Electricity Spot Market (WESM), Biofuels Act, Clean Air Act, The Philippine Grid Code, The Philippine Distribution Code, is authorized to ensure the timely commissioning and utilization of additional generating capacity;

2. The ILP should be vigorously pushed forward for self-generating facilities to contribute in mitigating the problem, and all public and private entities with SGFs shall register in the program on or before 31 December 2014. The government should, therefore, provide the necessary mechanism, including tax incentives, in providing cost recovery for fuel, operation and maintenance to encourage enlistment to the program;

3. Fast tracking of power plants for interconnection and expediting the preparation of grid impact studies (GIS), the distribution impact studies (DIS) as well as relaxation of certain requirements to facilitate interconnection of existing power plants could further mitigate the impending crisis;

4. Fast tracking of committed power projects by expediting the issuance of permits as well as relaxing certain requirements to facilitate the completion and commissioning of committed power plants could also help in generating additional capacity;

5. The government should intensively implement Energy Efficiency and Conservation Program which involves, among others, energy audits, retrofitting electrical lightings and installations with more efficient technologies and demand-side management which involves shifting of loads from peak periods to off-peak periods;

6. Maintenance program of power plants should be properly implemented to minimize the occurrence of forced outages; and

7. The JCPC, through its TWG created, should continue to monitor the implementation of the measures under the Joint Resolution to mitigate the effects of the projected power shortfall in 2015.

Addressing reporters before the sponsorship, Energy Secretary Jericho Petilla justified the need for the emergency powers.

Petilla dismissed critics, stressing this is the best solution government has. He also clarified that the joint resolution merely defers the implementation of the requirements of laws that will be suspended during the life of the resolution from power generating entities. These companies will still be required to comply with the provisions of environmental laws when the resolution lapses in July 2015.

Petilla echoed Umali's statements that there will only be a cost if the ILPs are tapped to run. At worst, that’s about P450 million.

"If you don’t use ILPs, you don’t spend anything. The good thing about the resolution is you only spend when you need it, if you don’t need it, you don’t spend,” he said.

Bayan Muna Representative Neri Colmenares has been questioning the need for the resolution, as well as the procedures it went through.

"Marami siyang procedural defects, di ito naka-agenda sa committee on energy pero siya na ngayon ang aaprubahan. Nag-violate ‘yan ng rules na walang notice at biglang pinasok. Ang isang problema sa emergency powers ay may dagdag na burden sa taongbayan whether going to be borne by consumers or public funds,” he said.

Colmenares also raised concerns on the suspension of portions of the Clean Air Act as well as other environmental concerns.

The resolution authorizes the suspension of relevant provisions of the Clean Air Act, the Biofuels Act, the Philippine Grid Code and the Philippine Distribution Code.

Colmenares is expected to reiterate his points in plenary.

A certification as urgent waives the three-day waiting period before a bill approved on second reading can be approved on third reading.