Flexible power mix policy sought

An umbrella organization representing some of the Philippines’ largest manufacturing firms has urged the Department of Energy to be flexible in implementing the prescribed quota for power sources for which the country’s electricity would be generated.

In a statement, the Federation of Philippine Industries (FPI)—which is composed of 34 industry associations and 120 manufacturing firms—said it was fully supporting the recent pronouncements of Energy Secretary Alfonso Cusi toward a “competitive power generation mix.”

This comes after Cusi said the DOE would not impose a quota to limit the technologies that could be used by power developers. Instead, the energy department will implement a mix comprising of 70 percent for base load, 20 percent for mid-merit and 10 percent peaking power plants.

A base load power plant is a power station that provides continuous supply of electricity throughout the year with some minimum power generation requirement.
Meanwhile, a load following power plant, regarded as producing mid-merit or mid-priced electricity, is one that adjusts its output as demand for electricity fluctuates throughout the day. Peaking power plants are those that run only when there is high demand for electricity.

FPI welcomed the DOE chief’s plan, saying this would promote a more competitive market and lower the power costs that consumers pay.

The group also said the DOE’s policy would ensure ample supply of power for the country as it moves toward industrialization.

“Secretary Cusi’s pronouncements are consistent with FPI’s stand on certain issues, especially on supporting industrial growth by ensuring stable baseload power supply,” FPI chair Jesus Aranza said.

FPI also recognizes that the country needs diversified energy resources, but noted this can be achieved even without mandating a strict power generation mix that will limit the technologies that will be developed by the private sector.

Several groups have been actively pushing for an energy mix with caps of 30 percent natural gas, 30 percent coal, 30 percent renewable energy and 10 percent for other fuels. But this could make the mix inflexible and may even cause rate increases that could burden consumers, FPI said.
Allowing all kinds of fuels to compete in the market, as Cusi argued, would actually lower the power rates because the least costly capacity will be dispatched first, the group said.

At the same time, the flexible power generation mix envisioned by the DOE will encourage power players to continue developing the projects they deem most competitive.

“Mandating an energy mix policy that caps the technologies will not only cut out flexibility but will also go against the idea of having a competitive market, where all suppliers can make offers,” Aranza said.
The government should let market forces work and ensure a level playing field to avoid abuse and protect consumers’ welfare, it said.