Energy chief seeks release of IMEM funds

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MANILA, Philippines—Energy Secretary Carlos Jericho L. Petilla is pushing for the immediate rollout of funds for the establishment of the Interim Mindanao Energy Market (IMEM), eyed as a measure that will help ease the worsening power supply situation in Mindanao.

On the sidelines of the Philippine Economic Briefing on Wednesday, Petilla said Philippine Electricity Market Corp. (PEMC) had funds that could be used for the infrastructure requirements of IMEM. However, it has to secure the approval of the Energy Regulatory Commission.

“The funds are there for PEMC. The problem is, we can’t touch it because we don’t have the ERC approval yet. We have stressed that to the ERC, and I’m quite sure they are aware of the problem in Mindanao. They are assuring PEMC that they will prioritize the approval of the budget,” Petilla said.

The energy chief is pushing for the approval of the fund release on Feb. 20, during the hearing for PEMC’s application for fund release.

Based on the application submitted earlier to the ERC, PEMC had earmarked P55 million to set up the IMEM. Of this amount, P34.26 million will come from the unused “market fees” that PEMC had collected from power generation firms that traded in the wholesale electricity spot market (WESM) last year.

The IMEM was envisioned to serve as a venue for “transparent and efficient utilization of all available capacities particularly during periods wherein the contracted supply capacities of the load customers such as the distribution utilities and the industrial customers are not enough to meet their demand.”

It will also show the “true cost of electric power to encourage the dispatch and utilization of available power generating facilities.” The IMEM is expected to encourage investors to put up new generating capacities in Mindanao.

In view of the possible delay in the implementation of IMEM, Petilla said he was optimistic there would still be adequate power supply in the region by summer, especially during the elections, given the implementation of the Interruptible Load Program (ILP).

Under the ILP, utilities or companies with embedded generators are urged to use their facilities to generate power instead of getting their supply from the main grid. The capacities they will be giving up can help boost supply for Mindanao.

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  • nazar_agawin

    The implementation of WESM in Mindanao is long overdue. Actually it is not only the implementation of WESM that worries Mindanao ECs and regional Chambers of Commerce. It is also the privatization of Agus and Pulangi Hydro plants because industry observers contend that for the WESM in Mindanao to be effective the Hydro plants must be privatized to make it more efficient and also to reflect the true cost of generation. It is my opinion that WESM must push through while at the same exploring other options on how to deal with the hydro plants. Foremost of these hydro plants is that resources must be fully utilized. Experience has shown us that the private sector is always efficient in managing business compared to government corporations. One option to resolve this impasse is to bid the management and operation of Agus and Pulangi hydro complex to power companies. In this way, the capacities and efficiencies of these plants will be maximized. Thus, the true cost of generation rate (TCGR) of these plants may not necessarily include the recovery cost on capital but only the operational cost. In other words, the government retains the ownership of the assets but the management and operation will be handled by the private power companies in competitive bidding. Without the capacity cost, the increase in TCGR will be at a minimum.
     
    Looking at NEA data in 2011, the average power cost of Luzon and Visayas is at 5.89 pesos per kWh, while that of Mindanao is only 4.55 pesos per kWh. This disparity can be explained by the generation mix in which Mindanao is 57% supplied with hydro power while Luzon and Visayas are supplied with 47% coal and 30% natural gas. Hydro power in Luzon is only a mere 7%. So an increase in generation cost of hydro in Mindanao would definitely impact the TCGR in Mindanao possibly higher than that in Luzon and Visayas. It is for this reason that opposition in the privatization of hydro plants is strong from almost all sectors in Mindanao.
     
    It is true that WESM encourages more power investment because aside from bilateral contracts as assurance from banks, power companies can also sell their excess power to the spot market. This scenario would help stabilize the power supply in Mindanao and eventually industries will put up investment and create jobs in the long run.
     
    nazar_agawin@yahoo.com
    power consultant

  • http://www.facebook.com/beng.atibo.3 Beng Atibo

    Why wait for a power shortage in Mindanao especially during election in May, when they could have addressed the problem before it becomes a catastrophe!!! What has ERC doing, sitting on the job???

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