It’s happening again.
Just a month into the Duterte administration, power companies are simultaneously shutting down plants, resulting in higher rates as demand outstrips supply.
“It’s déjà vu of November 2013, when the simultaneous emergency and maintenance shutdowns of several power plants triggered a sharp historic increase in the prices of electricity,” said Bayan Muna Rep. Carlos Isagani Zarate.
Zarate called on the Energy Regulatory Commission (ERC) to probe the simultaneous shutdowns of big major plants in Luzon last week.
The shutdowns led to rolling outages across Luzon, prompting Senate Minority Leader Ralph Recto also to seek a probe.
In a resolution filed on Tuesday, Recto called for an inquiry to determine the status of power supply for the Luzon grid after nine power plants on the country’s biggest island had to be shut down over the past few days, while four others had to operate on limited capacity.
“Power interruptions in Luzon could disrupt the economic growth momentum of the Philippines and could discourage potential foreign investors,” Recto said.
The impact of the plant closures, Zarate said, was immediately felt at the Wholesale Electricity Spot Market (WESM) where prices surged to as much as P20 per kilowatt-hour after averaging only between P3 and P4 per kWh the previous weeks.
Power distributors turn to WESM to cover unforeseen shortages, leading to higher bid prices and retail rates for consumers.
Zarate said customers were expected to see the price spike in their September bills.
Another market play
Last week’s steep rise in WESM prices could be “another market play by these power plant owners” similar to what they did in 2013, Zarate said.
At the time, the House of Representatives blocked the P4.15-kWh rate increase demanded by Manila Electric Co. due to a price spike in WESM prices as a result of the simultaneous closure of power plants amid the regular maintenance shutdown of the Malampaya natural gas plant off Palawan.
Philippine Electricity Market Corp. (PEMC), the operator of WESM, punished three power firms—Therma Mobile, Inc., Power Sector Assets and Liabilities Management Corp. and Panasia Energy, Inc.—for refusing to sell power at WESM at the height of the power shortage. Had they sold electricity at WESM, the abnormal price surge could have been prevented.
The ERC has initiated a probe of the simultaneous outages of key power generation facilities, which placed the Luzon grid on a red alert status on Friday and Saturday.
“Regarding (the) outages, there is a mechanism in place wherein generating companies on outage are required to submit report to ERC the details and reasons of said outage. These reports will be evaluated by ERC to determine appropriate actions to be taken, if any,” said ERC spokesperson Floresinda G. Baldo-Digal.
Digal added the ERC requested the market surveillance committee of PEMC to submit a report on the July 25 to 29 trading week, when the outages occurred.
Anticompetition
As early as Friday last week, Energy Secretary Alfonso G. Cusi had sent a letter to the ERC, asking it to “look into the matter and determine whether or not there is the existence of anticompetitive behavior by the industry players.”
Recto, a former socioeconomic planning secretary, said the investigation sought to determine “measures that would further ensure a reliable and secure supply of electric power.”
Power supply in Luzon became unstable as the continued outages of major energy facilities had cut the available supply by almost 3,000 MW as of Saturday.
The rest of last week saw the Luzon grid being placed on yellow alert, which meant that the available reserves were insufficient to meet the grid’s required contingency of 647 MW and thus, any further outage, even from a single power plant could cause brownouts all over Luzon.
Outage of Sual, others
The huge loss of power supply was brought about by the outage of the 647-MW Sual Coal-Fired Power Plant Unit 2; 300-MW Calaca Coal-Fired Power Plant Unit 2; 280-MW Malaya Thermal Power Plant (MTPP) Unit 2; 302-MW GN Coal-Fired Power Plant Unit 1; 382-MW Pagbilao Coal-Fired Power Plant Unit 2; 360-MW Kalayaan Units 3 and 4 due to low water elevation; as well as the maintenance of the 245-MW South Luzon Therma Energy Corp. Units 1 and 2.
The 180-MW Kalayaan Unit 2 and the 250-MW Sta. Rita Natural Gas Power Plant Unit 2 were on planned maintenance shutdown, while the MTPP Unit 1 was running on a limited capacity at 135 MW.
On Monday, power supply in Luzon started to stabilize, according to the Department of Energy as several power facilities have resumed operations.
The 180-MW Kalayaan Unit 2 and the 250 MW Sta. Rita Natural Gas Power Plant Unit 2 continued to be on planned maintenance shutdown.
Economic cost
In a statement, neophyte Sen. Sherwin Gatchalian called on the Duterte administration to address the erratic power supply, warning that a Luzon-wide brownout would cost the country P3.3 billion in economic losses per hour.
“Widespread power outages across Luzon would bring national economic productivity to a standstill. The Duterte administration must look into immediately expanding the power supply by tapping new energy resources,” said Gatchalian, chair of the Senate committee on energy.
Gatchalian derived his estimate from the country’s first-quarter gross domestic product this year based on a Philippine Statistics Authority report.
The senator said the country’s economic growth “will depend on ensuring that our domestic industries have access to cheap and reliable electricity.”
Gatchalian also vowed to push for the lowering of electricity prices.
“Making reliable electricity more affordable will improve the lives of millions of Filipinos. We must work toward easing the burdens of our countrymen and countrywomen,” he said.
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