Gov’t invokes Epira law to address power crisis
Energy Secretary Carlos Jericho L. Petilla: We have a problem. INQUIRER FILE PHOTO
MANILA, Philippines–The National government has invoked Section 71 of the Electric Power Industry Reform Act (Epira), which will give the state the authority to carry out the necessary measures to address an “imminent” power shortage.
By doing so, state-run Power Sector Assets and Liabilities Management Corp. (PSALM) will be able to contract at least 300 megawatts of additional capacities to help avert an impending power supply crunch of about 600 MW by the summer of next year, Energy Secretary Carlos Jericho L. Petilla told reporters on Thursday.
“I have long admitted that there is a power crisis and that we have a problem. The shortage next year is around 600 MW, which could get worse with the El Niño [occurrence],” Petilla explained. “We have a projected deficiency by 2015 of about 285 MW but we need to put up a comfortable, reasonable reserve of about 300 MW that’s why we are looking at 600 MW as insufficiency for next year,” Petilla said.
The energy chief made the confirmation Thursday after President Aquino announced in his speech during a power project launch that the national government will be asking Congress to draft a joint resolution to allow the government to contract additional capacities. The government, under the Epira, has been barred from entering into power supply contracts with the private sector and from putting up its own power facilities, except in cases wherein a power crisis has been declared.
‘Last resort’
There is an “Electric Power Crisis Provision” under Section 71 of the Epira, which states that “upon the determination by the President of the Philippines of an imminent shortage of the supply of electricity, Congress may authorize, through a joint resolution, the establishment of additional generating capacity under such terms and conditions as it may approve.”
Petilla, however, stressed that the move by the government to contract additional capacities should be the “last resort,” meaning all other options must be exhausted.
“We will push for projects coming in, and we will push for the Interruptible Load Program (ILP). I have high hopes for ILP,” he said.
“Basically, we’re not after anything other than to allow the government to contract additional capacity on a short-term basis, and that’s it. For that to be legalized, you need the President to declare it,” Petilla explained. “It’s not necessary powers. As you have observed, it took time [for us to do this] because we have to validate everything. It’s more of an authority to contract rather than a totalitarian emergency power. We’re just invoking that (Section 71 of Epira) on a temporary basis.”
Diesel generators
According to Petilla, they are now looking to lease for at least two years modular diesel generator sets (gensets) to help augment the supply by next year. These may be sourced from the United Kingdom, Australia and Dubai.
The target is to make a decision within the month as to how much capacity will be sourced from such facilities, so these can be made available in the country by end-February 2015. The usual leasing arrangement is about $20 million per 100 MW per year, according to Petilla.
“We’re looking for those who can supply at the cheapest price, can give the shortest contract and can install these facilities at a much shorter period,” he added.
But he did not disclose the financing scheme for this proposal as this matter will be left to the Department of Finance. One possible source of funding will be the royalties that the government receives from the Malampaya gas project.
Stopgap measure
Petilla continues to rally other measures, specifically the ILP, which is also being pushed by other business groups, as this can serve as an immediate, stopgap measure to alleviate a power supply shortfall. Customers—particularly the big industrial and commercial customers—who have the ability to produce their own electricity through generating sets are among those qualified to be part of ILP.
Under this program, participating customers would allow distribution utilities to either cut off or reduce the electricity being supplied to them, particularly during peak periods of the day or during emergency conditions. During these hours, “deloaded” customers are expected to use their gensets.
In turn, these qualified customers would be compensated since, by generating their own power, they may incur higher costs for running their standby generating sets or plants than when their power is supplied by their distribution utilities.
