Cebu seeks ways to avert power crisis

CEBU CITY — Lights could go out in Cebu, Negros and Panay in the last quarter of the year because of an electricity shortage, but officials say the situation can immediately be addressed by the operation of the Visayas power spot market and a new rate scheme for a regional generator. Opening the wholesale electricity spot market (WESM) in the Visayas and approval of time-of use (ToU) rates for Visayan Electric Co., Inc. (VECO), they said, were the most doable solutions to an expected 38-megawatt (MW) shortage later this year. Longer-term recommendations are the migration towards a "smart" grid and transfer of a power barge from Davao to Panay. Crispin Lamayan, National Transmission Corp. assistant vice-president, told the Cebu Chamber of Commerce and Industry (CCCI) last Friday that the island of Panay would bear the brunt of shortage. Mosses Red, in charge of dispatches at National Power Corp. (Napocor) Visayas, said power reserves in Cebu, Negros and Panay were already very thin for this summer. Demand is expected to rise next year, with no new sources in the pipeline, and the year after that. By 2010, peak demand is expected to be almost 900 MW, with an average dependable capacity of only 746 MW. In Metro Cebu — Liloan in the north to San Fernando in the south — VECO is projected to incur a deficit of at least five MW by September, rising to a little over 15 MW in 2009 and nearly 28 MW in 2010. "But all is not lost. When there’s a crisis, there’s an opportunity," Mr. Lamayan told the CCCI. He said the WESM could address the shortage as this would allow the use of generating units that are currently not being utilized due to high operation costs. "There’s power available that could be traded in the WESM and there are people willing to buy power, even at a higher price, just to avert any outage at certain hours. But right now, there is no market mechanism to do this," he said. Napocor’s gas turbines at the Naga power complex, about 20 kilometers south of this city, are commissioned only during emergencies. The two units have a total dependable capacity of 50 MW. In the private sector, some big firms have generating units where excess power could be traded over the spot market. Roger Lim, general manager of Cebu Private Power Corp., echoed this. He said the WESM presents an immediate solution to the power shortage because there are hidden capacities that could be traded and there are "some who are willing to have interruptible supply and get paid for it." "We’re ready. We’ve been conducting live dispatch operations. I don’t know why they won’t operate the WESM yet," Mr. Lim said. He said the WESM would not cause price spikes because existing demand is already covered by bilateral contracts. What will go up is contested demand, he added. Market operator Philippine Electricity Market Corp. (PEMC) had originally targeted a January launch, later postponed to February and again to March. The new target is April 26, the start of the billing period. "[There is] still no word from DoE (Department of Energy). We have already given all our compliances some time ago," PEMC President Lasse A. Holopainen told BusinessWorld. The Energy department is conducting a due diligence and evaluating a report by Australian consultant Intelligent Energy Systems regarding the market’s Luzon operations and its readiness in the Visayas. WESM Visayas has been in trial operations since 2005, the "longest trial in the world for any market," Mr. Holopainen said. "If we’re not ready yet, then we don’t know what else to do," he added. VECO representative Ricardo B. Pardillo, meanwhile, said the firm was still awaiting Energy Regulatory Commission approval of the ToU rates, which would allow it to offer lower rates during off-peak periods. "Hopefully, we will be able to implement ToU rates soon," he said. Mr. Lamayan said the transfer of a power barge in Davao to Panay would ease the shortage there but Aguinaldo Briones, senior science specialist at Energy department’s regional office, said Davao might also need the unit as Mindanao also has its own power problems. He gave assurances, however, that the Energy department was considering measures to address the power shortage. Projects to tap new power sources include the exploration of the geothermal potential of Biliran in the Eastern Visayas and the optimization of the Palinpinon power complex in Negros Oriental. Geothermal exploration in Cabalian, Southern Leyte, however, has been suspended because the yield would be less than the required 100-MW output. Mr. Lamayan said a long-term solution would be the "smart" grid, where monitoring and control of electrical distribution networks would be enhanced and automated for improved reliability, efficiency and cost effective operations. The power supply situation in Cebu, Negros and Panay is projected to stabilize in 2010 with the completion of the first of three 82-MW coal-fired plants being built by Cebu Energy Development Corp., a consortium made up of Global Business Power Corp., Formosa Heavy Industries and Abovant Holdings (a joint venture of Aboitiz Power Corp. and Vivant Corp.). The second and third units are scheduled to come onstream in June and September 2010. KEPCO-SPC Power Corp. is also target-ting the completion of two 100-megawatt coal-fired plants in Naga by 2011. - BusinessWorld