No lasting power supply solution in sight for Mindanao

DAVAO CITY — Mindanao’s power deficit seems to be getting worse by the day, and with no new generation project in sight, the situation is expected to worsen further next year at the very least. Central business districts in the cities of Davao and Cagayan de Oro, which were hardly affected by rotating brownouts in recent weeks, were powerless for less than an hour late Wednesday morning. While the Website of the National Grid Corp. of the Philippines (NGCP) — the private operator of the country’s transmission network — showed that Mindanao had a 357-megawatt shortage on Wednesday, a check with the regional branch here of the NGCP showed that the entire grid’s deficiency had neared 500 MW by mid-afternoon. The situation may not be short-lived, as NGCP estimates that Mindanao will need 484 megawatts more in four years, assuming a 5.76-percent annual average growth in demand. But aside from the 200-MW coal-fired plant in Maasim, Sarangani by Conal Holdings Corp., which now has to contend with protest actions from religious and environmental groups; the 42-MW project of Hedcor Corp. in Sta. Cruz, Davao del Sur; and the 8-MW hydropower plant of Cagayan Electric Power and Light Co., there are no new investments in the power sector. And since it takes about three years to build a power plant, the current situation is expected to get worse. Already, the NGCPexpects Mindanao’s power deficit to average 308 MW by next year. Among the reasons given by the NGCP for the grim situation are low output from hydroelectric facilities, with the Agus’s six plants in Lanao provinces running at only 120 MW out of the total 727-MW capacity, and the Pulangi plant in Bukidnon running at 100 MW of its 255-MW rated capacity. Ironically, rains have fallen in southern Mindanao in recent days, including more than an hour of heavy downpour in Davao City on Tuesday night. Nevertheless, Davao Light and Power Co. said it had implemented rotating hourlong power interruptions in its entire franchise. Rossano C. Luga, Davao Light corporate communications officer, said the brownout schedule had to be implemented in the city since the NGCP had imposed a 93-megawatt limit for the Davao region as of Wednesday morning. Luga called on consumers to save electricity to help the company rationalize power supply. The 30-minute brownout before noon in Davao City was the first since the start of the year. The city had been largely spared from the rotating brownouts experienced in most parts of Mindanao since two weeks ago, due to Davao Light’s 58-megawatt Bajada backup plant. Cagayan de Oro’s situation is worse, with power utility officials forced to schedule four-hour daily rotating brownouts starting on Wednesday. "Even with [backup power generating plants] and the voluntary load shedding of the big industries in the city, we could not accommodate the high load curtailment," said Marilyn A. Chavez, senior manager and customer relations head of Cagayan Electric Power and Light Co. In Zamboanga City, NGCP corporate communications officer Ma. Rosette Martinez said the power condition in the region, and in Mindanao as a whole, could be immediately alleviated only with sustained heavy rainfall in the coming days. Edgardo S. Calabio, regional corporate executive of Davao Light’s Revenue and Regulatory Affairs, earlier cited immediate measures such as fast-tracking Agus 5 repairs, resuming operations of the 100-MW Iligan diesel power plant that was shut down last month due to a row with the local government, and for companies to invest in embedded generators. In the longer term, however, only additional plants will narrow the gap between supply and growing demand on the entire island. The problem, Calabio said, is that attracting investments in the sector might not be easy since power rates here are cheaper than those in the Visayas and Luzon. In Davao City, for example, the local power utility collects P6.58 per kilowatt-hour against P7.22/kWh in Cebu and P9.32/kWh in Metro Manila. "What we [users] pay does not reflect the true cost of power. We should be paying more," Calabio said, noting that grid rates are based on the value of the power plants and other assets, which are quite old. "Adjust the rates, if you would like to entice investors to come in. Reflect the true cost of power," he added. — CQF, LGD, DTW and JBE, BusinessWorld