DOE orders consumer safeguards as Malampaya shutdown looms

Malampaya natural gas plant. https://malampaya.com/

The Department of Energy has outlined measures to mitigate the impact of the maintenance shutdown of the Malampaya natural gas fields scheduled for later this month, with Energy Secretary Alfonso Cusi ordering stakeholders to ensure the continued availability of electricity to protect consumers from the so-called “market abuses.”

The facilities of the Malampaya gas fields off the coast of Palawan are set to be closed for maintenance and repair from Jan. 28 to Feb. 16, 2017, and industry regulators said that consumers would experience an uptick in their electricity bills come March as power plants temporarily shift to higher-priced fuels as an alternative.

In a press briefing, DOE officials said they will coordinate closely with all stakeholders including the Malampaya Consortium, the National Grid Corporation of the Philippines (NGCP), Manila Electric Co. (Meralco), Power Sector Assets and Liabilities Management (PSALM) Corp., Philippine Electricity Market Corp. (PEMC) and generation firms and other distribution utilities to ensure sufficient power supply during the shutdown period.

Initially, Cusi instructed that “materials, equipment and other assets necessary for the maintenance of Malampaya should all be delivered by Jan. 15, and these should be ready for deployment to make sure that the repair activities should remain on schedule.”

The DOE noted that during the maintenance activities, some power plants are scheduled to go on maintenance as well.  Based on initial study, the lowest projected power supply capacity during the period will be 8,747 megawatts on Feb. 18, while highest demand is projected to reach 8,610 megawatts on Feb. 9.

To ensure sufficient power supply, the DOE required the affected natural gas power plants to run on alternative or replacement fuels. Natural gas as fuel costs around P4 per kilowatt-hour while replacement fuels, such as diesel, cost between P6 and P8 per kWh.

Cusi emphasized that his department “is exploring all possible options and remedies to maximize protection for consumers.”

To augment power supply, the DOE has ordered the reactivation of the Interruptible Load Program (ILP) in which around 900MW are enrolled. This scheme involves bringing in large power consumers in the business sector, like shopping malls or manufacturing plants, to generate their own electricity using generators for which they will be compensated by consumers.

The DOE also encouraged consumers to practice effective “demand-side management.”

Cusi also enjoined the public to “be proactive in computing the effect of price adjustments to be provided in the simulations given by the agencies concerned to for consumers to practice efficiency measures to avoid price shocks.”