Costlier power plants eyed to head off crisis

The Department of Energy (DOE) and power sector players have agreed to tap oil-fed and other costlier generating facilities to ensure the country’s supply of electricity.

In an industry meeting on Thursday, Energy Secretary Angelo Reyes said that power plant operators have agreed to run their facilities in Luzon at maximum or allowable generating capacity, subject only to physical and technical constraints and force majeure.

“We all agreed we will do whatever is necessary to protect the national interest. Because generation of adequate and secure supply of electricity is in the national interest,” he said.

“We all know that the drought situation will aggravate and pose some problems in Mindanao. The situation in the Visayas is really difficult, even as we speak there are already brownouts there ,” he said.

The DOE chief said the department has already drafted a circular prescribing a monitoring and reporting system to ensure adequate power supply.

Besides this measure, Korea Electric Power Corp.’s 650-megawatt Malaya thermal power plant and San Miguel Corp.’s 620-megawatt Limay combined cycle power plant will be deployed to avoid a repeat of the brownouts that hit Luzon on January 25.

Both plants are oil-based so these are more expensive to operate than generating facilities running on other fuel sources.

First Gen Corp.’s 1,000-megawatt Santa Rita and 500-megawatt San Lorenzo natural gas plants will be fueled by the more expensive condensate for about a month because the Malampaya project in Northwest Palawan is undergoing maintenance starting February 10.

Because of this, Reyes said the DOE would have to consult with the Energy Regulatory Commission to find out the impact on electricity rates.

“[But] We don’t want [power plant operators] to say that they don’t want to generate power due to the bad situation or uncertain revenue streams or for whatever reason. We want power available but we want to ensure and protect also those people in the power industry that they will be treated fairly,” the DOE chief said.

Mario Pangilinan, Philippine Electricity Market Corp. (PEMC) executive vice president, said that prices have started to inch up due to a decline in supply and an increase in demand following the the warmer weather.

Prices are rising because of the tight market conditions, he said, adding that rising temperatures and the decline in hydro plant capacity are conspiring to put a squeeze on supply.

Last month, Luzon suffered brownouts when the 1,000-megawatt Sual coal-fired power plant broke down just as several other plant facilities were shut down for their scheduled maintenance. Visayas and Mindanao are also suffering from slim power reserves because of insufficient generation and transmission line constraints.

The power situation in Luzon and Mindanao has also been compounded by El Niño that has brought down production of hydro facilities in those regions. –EUAN PAULO C. AÑONUEVO Reporter, Manila Times