Brace for rolling brownouts, higher rates, consumers told

CONSUMERS should brace for higher power rates due to an impending shortage of electricity and the onset of a hot and dry summer, industry representatives said Thursday.

“Higher temperatures mean higher demand [for power],” said Mario Pangilinan, executive vice president of Philippine Electric Market Corp., which operates the wholesale electricity spot market.

Pangilinan said spot prices had been rising since Jan. 25, when two rolling brownouts hit the Luzon grid.

And the dry spell caused by El Niño would keep hydroelectric plants out of commission, adding to the tight supply, he said.

The president of National Power Corp., Froilan Tampinco, said the Luzon grid would have adequate reserves from February to May, but prices would rise.

He said the scheduled 30-day shutdown of the Malampaya natural gas field in Palawan for maintenance on Feb. 10 would affect supply and might trigger higher rates.

First Gen Corp.’s 1,500-megawatt natural gas plants in Sta. Rita and San Lorenzo could run on liquid fuel, but the 1,200 Ilijan plant was not designed to run on backup fuel.

Backup fuel was more expensive than natural gas and its cost would have to be absorbed by the market, Tampinco said.

Luzon’s power reserves become vulnerable around March or April, when the reserve level is only around 700 megawatts. That means any unexpected shutdown of any power plant could trigger another round of rolling brownouts.

“For instanc, if a 1,000-megawatt power plant shuts down and you only have 700 megawatts in reserve, then you’ll have rotating brownouts,” Tampinco said.

Aboitiz Power Corp. executive vice president Luis Miguel Aboitiz said prices were going up because of a shortage.

“Actually, we’re supposed to have a surplus, but three things happened at the same time,’’ he said.

“Sual ran out of coal, Masinloc went down, one of the gas plants is down and Limay is down. If one of those things didn’t happen, then we wouldn’t be under the same shortage we have now.”

Aboitiz said he expected the situation to improve with the arrival of coal for the Sual power facility today. One unit of the Sual plant is not running due to lack of coal. San Miguel Corp., which procures fuel for Sual, bought the wrong kind of coal.

San Miguel’s 540-megawatt Limay plant is also down, but the company has committed to running it by the end of March.

Energy Secretary Angelo Reyes and industry representatives agreed to cooperate to ensure an adequate supply of electricity, especially during the May elections.

“Yellow- and red-alert status is not acceptable in the power industry,” Reyes said.

“We all agreed to do whatever is necessary to protect the national interest.”

Reyes said his department and its attached agencies would work with the private sector to come up with a draft department circular “prescribing exactly what generation, transmission and distribution companies will have to do to ensure adequate and secure supply of electricity.”

He said the stakeholders would also monitor the precarious power situation in the Visayas and Mindanao.

“The situation in the Visayas is really difficult, and even as we speak there are already brownouts there,’’ Reyes said.

We all know that the drought will aggravate and pose some problems in Mindanao. And we all know that when rainfall levels are low there will be less water to run our hydropower plants.”

Under the draft circular, generating companies must work at maximum capacity unless they are not able to do so.

“We don’t want a situation, since we have privatized, where for some reason private corporations will withhold power for reasons such as fear of not getting paid or low prices,’’ Reyes said.

“We want to ensure that people who participated in the privatization will be compensated reasonably.”

Earlier, President Arroyo said the administration would renew its appeal to the Energy Regulatory Commission to temporarily allow bulk consumers to choose their own suppliers in a bid to bring down power costs.

Manila Electric Co. said it would pay this year’s dividend and invest money even after its rate increases were suspended.

“We certainly have the cash for the dividend and capital expenditures this year,” said Meralco’s chief financial officer Betty Siy-Yap.

“The suspension of the rate increase is not a cancellation. We don’t expect this delay to affect our credit rating.”

Meralco shares have fallen 16 percent over the last month, with declines accelerating after it said on Jan. 27 that it would suspend a rate increase approved by the Energy Regulatory Commission while appeals from consumer groups were resolved. –Alena Mae S. Flores with Joyce Pangco Pañares, Bloomberg