Gov’t switches gear to zap 2015 power crisis

Out of time to lease generator sets for the expected power crisis in the summer of 2015, the government is now focusing on a “carrot and stick” approach to squeeze additional capacity from the private sector.

For one, VAT (value added tax)-free compensation seems to be in the works to encourage participation in the Interruptible Load Program or ILP.

House committee on energy chair Rep. Reynaldo Umali (2nd district, Oriental Mindoro) told reporters that the joint resolution granting President Aquino’s request for emergency powers to deal with the anticipated power crunch would be focused on the private sector.

Since the House of Representatives energy committee has dropped the option of letting the Department of Energy (DOE) rent generation sets for back-up power, the DOE will instead facilitate the implementation of the ILP.

Among the proposed provisions of the joint resolution is to exempt ILP compensation from the 12-percent VAT, Umali said. That’s one “carrot.” As for the “stick,” Umali said prospective ILP participants were given only up to Dec. 1 to join in order to be ensured of compensation for their voluntary use of self-generating power capacity. Otherwise, they may be called in to run their generation sets without compensation.

Under the ILP, participating institutions and companies may be called upon to use their own power generating units or gensets to ease demand from the grid during peak hours or when there is a supply deficit.

The DOE’s updated power situation report lowered the risk of outages from 13 weeks to just two weeks (in the first two weeks of April 2015). “That may just be one-hour rotating brownouts,” Umali said.

Energy Secretary Carlos Jericho Petilla said in a phone interview that the lease or rental option was still possible if it was started in late September but now it was too late to contract such facilities even if the joint resolution would allow it.

On a positive note, he said, there were now more participants in the ILP and power plant developers had been trying to speed up the completion of their projects since the DOE sounded the alarm on the possible power crisis next year.

So far, Manila Electric Co. (Meralco), the largest distribution utility in Luzon, has signed up 163 megawatts (MW) of power capacity from captive customers, with an additional 71 MW being processed, said Lawrence Fernandez, who leads Meralco utility economics section, in a text message.

He also said the company’s retail supply arm, MPower, had obtained expressions of commitment among its contestable customers for 168 MW of interruptible load capacity.