When Mindanao electricity market goes online, more power seen to go around

MANILA, Philippines—The Department of Energy is hoping to free up as much as 360 megawatts in embedded capacity in Mindanao once it implements an interim electricity market on the island in March 2013.

This additional capacity is expected to reduce the power supply crunch in Mindanao, which was brought on by its dependence on power generated from hydropower complexes and lack of fresh investments in new generation facilities.

Over the short term, the trading platform is seen to be the solution to the 200-MW shortfall on the electricity-starved island expected by the summer of 2013.

According to Energy Undersecretary Josefina Patricia M. Asirit, the agency has already identified the stakeholders who can participate in the Interim Electricity Market in Mindanao (IMEM), which will provide both local and foreign investors an assured platform where they can trade their excess power.

This scheme is similar to the existing wholesale electricity spot market (WESM) in Luzon and Visayas, except that it will involve the so-called “interruptible loads.”

Apart from providing the much needed additional power supply, the IMEM will also allow the Mindanaoans to be exposed to the true cost of power—a move that is expected to help create a more favorable business environment that may entice more companies to invest on the island’s power sector, Asirit explained.

She also said that the possible impact on the blended cost of power in Mindanao, based on simulations, would only be around 30 centavos per kilowatt-hour. This amount supposedly would be less than the additional amount to be paid for should the power come from diesel-fired facilities.

Currently, the DOE is preparing for a series of consultations and information campaigns in Mindanao starting today. It is also drafting a circular that will formalize the setting up of IMEM, the trial run for which has been set next March. Full implementation is expected by May of 2013.

According to Asirit, there are existing funds that can be tapped to finance the P50 million needed to roll out the IMEM, which, she stressed, is highly critical in ensuring adequate power supply in Mindanao, particularly during the May 2013 elections.

The Philippine Electricity Market Corp., which operates the WESM in Luzon and Visayas, will be heading the IMEM, she added.

Energy Secretary Jose Rene D. Almendras earlier said that once a trading mechanism, such as the IMEM, is in place, investors would then flock to Mindanao.

The IMEM is crucial to Mindanao especially since the other measures that the DOE is banking on to shore up supply on the island may not push through in time for next summer.

As of Friday last week, Mindanao posted a power supply deficit of 344 MW.—Amy R. Remo