Power plants holding back on Mindanao, says NGCP

Power network operator National Grid Corp. of the Philippines (NGCP) said it is capable of transmitting sufficient power to the Mindanao grid and the power hitch in the region is a result of a nagging supply shortfall rather than a transmission problem.

NGCP spokesman Cynthia Perez-Alabanza cited official data showing a recurring supply shortfall that showed that the root cause of Mindanao’s power outages is the deficiency of generation supply and not a supposed transmission problem.

She pointed out that should state firm National Power Corp. (Napocor) nominate the entire installed capacities of its power plants, NGCP could still manage to transmit them to the grid.

Hence, she said, one short-term solution to the current power supply problem in Mindanao is for power generators or producers to make the electricity they produce available as baseload supply.

“The combined output of Mindanao power producers is just barely enough to meet the island’s present requirements, but there is an artificial shortage at present because some of these generators or producers sell their output to the NGCP as ancillary services, which fetch higher rates, instead of selling the energy as generation capacity,” Alabanza said.

In a meeting with Energy Secretary Jose Rene Almendras, NGCP presented the real power supply situation in Mindanao, citing data on available energy nominated by state firm National Power Corp. (Napocor) that indicate a supply deficiency.

Based on NGCP data, the supply shortfall last Friday was 74 megawatts (MW) as total power nominated totaled 1,102 MW (from an installed capacity of 1,813 MW) as against a projected requirement of 1,176 MW. An actual 1,115 MW were dispatched thus the actual power provided by the grid was 61 MW short of the requirement.

“This means that somebody is not presenting the real power situation in Mindanao, and it is not us,” Alabanza told reporters.

She said the NGCP is committed to helping the government solve the power crisis in Mindanao, stressing that the situation may worsen in the coming years if the problem would not be resolved now.

The NGCP official said the government should recognize that the power interruptions in Mindanao would continue because of shortage in power supply and generation.

Napocor had nominated lower power from its hydroelectric power plants, particularly from its Agus 1 to 6 HEPP.

Normally, Napocor’s power plants would nominate their available capacities to the System Operator (SO) of NGCP which in turn is responsible for the dispatch of these nominated capacities to the grid.

However, the Oct. 1, 2010 data clearly show that Napocor’s nominated capacities were way below their installed capacities.

Data showed that Napocor nominated only 26 megawatts (MW) of the installed capacity of Agus 1 HEPP.

Napocor did the same with its other Agus HEPP. For Agus 2 to 6, it only nominated 92 MW, 130 MW, 43 MW and 122 MW as against their installed capacity of 180 MW, 158 MW, 55 MW and 200 MW, respectively.

This lower Napocor nomination, Alabanza said, was also true to its other power plants. For instance, Napocor only nominated 95 MW of Mt. Apo Geothermal Power Plant which has an installed capacity of 108 MW. For Western Mindanao Power Corp., Napocor’s nominated capacity was only 90 MW compared to the power plant’s 112 MW installed capacity.

For Pulangi 4, the same data showed that Napocor had nominated only 210 MW out of hydro power plant’s total installed capacity of 255 MW. “In instances where the actual dispatch was lower that the nominated energy, our Mindanao personnel verified that NPC plant personnel confirmed that actual plant conditions limited actual energy production. NGCP dispatched all the available energy as required by the grid. In no instance did NGCP refuse to transmit available energy, when demanded, as insinuated by some quarters,” Alabanza said.

Alabanza said this only goes to show that the problem of Mindanao lies in the deficiency of generation supply and not on transmission constraints.

She also pointed out that should Napocor be able to nominate the entire installed capacities of its power plants, NGCP could still manage to transmit them to the grid. “Our lines are more than adequate to handle the current supply and demand traffic,” Alabanza emphasized.

The NGCP official said the company’s capability to transmit power to the Mindanao grid will be reinforced further once the repair and energization of two back-up lines are completed this month.

Alabanza said they are expected to energize within this month the 230 kV Maramag-Bunawan Lines which will serve as a back up line in case of any line tripping to the south.

The repair works on Agus 2-Kibawe 138 kV Line 1, on the other hand, will also be finished within the month of October. This line will also be used by NGCP as back up line to support the steady flow of power in the Mindanao grid.

She said the NGCP is committed to helping the government solve the power crisis in Mindanao as she warned that the situation may worsen in the coming years if the problem would not be resolved now.

The NGCP official said the government should recognize that the power interruptions in Mindanao will continue because of shortage in power supply and generation.

NGCP, she said, is recommending a short-term solution to the current power supply problem in Mindanao which is for power generators or producers to make the electricity they produce available as baseload supply.

Baseload plants are the production facilities primarily used to meet some or all of a given region’s continuous energy demand, and produce energy at a constant rate, usually at a low cost relative to other production facilities available to the system.

Examples of baseload plants using nonrenewable fuels are nuclear- and coal-fired power facilities.

Ancillary services, on the other hand, refer to power supplier-driven services that are necessary to support the transmission of electricity from power resources to load customers to maintain the stability, reliability and quality of power services.

A couple of weeks ago, Energy Secretary Jose Rene Almendras was quoted by the media as saying “We need baseload generation as soon as possible,” when asked by reporters to comment on the decision of the Aboitiz group to reduce the share of hydroelectric power plants in favor of clean coal facilities.

He said there is really a need for these kinds of baseload power facilities.

Power producers must enter into supply contracts with the distribution utilities in their localities so NGCP could dispatch such power as baseload supply for use by Mindanao consumers.

The NGCP contracts the use of power barges of the Aboitiz-led Therma Marine Inc. (TMI) for the provision of ancillary services only, not for the supply of power for the consumption of end-users.

Alabanza said the NGCP is not allowed by law to contract with power generators for the supply to end-users.

Some interest groups familiar with the Mindanao power problem have called on NGCP to dispatch TMI’s power barges to make up for the lack of baseload supply in the grid.

Alabanza said the NGCP is bound by the provision of the Ancillary Service Procurement Agreement (ASPA) with TMI, as approved by the Energy Regulatory Commission (ERC).

Unless revoked or canceled, NGCP will dispatch these power barges as “dispatchable reserve” type of ancillary services only, not as baseload supply.

According to Alabanza, the NGCP does not profit from the current setup because it passes on to user-distributors the same price it pays power producers whose output are used for ancillary services.

The NGCP actually absorbs losses from such transactions, she said, “because it pays the producers the full amount billed even if it does not collect the full amount from the users. We have been having a hard time collecting from some users of ancillary services in Mindanao.”

Also, the cost of power from baseload supply for consumers is computed per kilowatt-hour, which means based on actual consumption. Power not used by consumers, therefore, does not earn revenue for NGCP because it cannot be stored.

Power supplied for ancillary services, on the other hand, is computed per kilowatt-month and is pegged at the highest peak use for that particular month, which explains the much higher rate.

Prior to the sale by government to the Aboitiz group, the Mindanao barges were being operated and dispatched by state-owned National Power Corp. (Napocor) as baseload plants.

Alabanza explained that as approved by the ERC, power producers get a premium rate for generating power for ancillary services because their committed capacities have to be on call 24/7 to ensure that NGCP has a ready source for power whenever there is a need for the dispatchable reserve.

“The NGCP cannot do anything about this setup because the rate fixing mechanism was approved by the ERC after due public consultation. The procedure was initiated long before NGCP’s time,” she said.

It is a setup that NGCP inherited since it formally took over on Jan. 15, 2009 the crucial task of delivering safe and reliable electricity throughout the archipelago, a responsibility formerly held by the National Transmission Corp. (TransCo).

Alabanza said the NGCP cannot control to whom the power producers sell their energy, whether for ancillary services or for baseload supply, because they are all in the private sector. NGCP is not a government agency that has supervisory powers over these producers. –Daily Tribune