Osmeña computation shows no need for emergency powers

Carmela Fonbuena
Osmeña computation shows no need for emergency powers
'There is an incredible amount of megawattage available. The list shows 3,169 megawatts for Luzon for Generating units from 1 megawatt and above,' says Senate committee on energy chairman Sergio Osmeña III

MANILA, Philippines – Fearing a repeat of the horrors of state intervention in the power sector, Senator Sergio Osmeña III is bent on getting private sector cooperation to fill in the projected power shortage in the summer of 2015, and eliminate the need to grant extra powers to President Benigno Aquino III.

Osmeña has computed at least 815 megawatts that can fill in an anticipated power shortfall. He said this is just the “tip of the iceberg” because many private companies’ self-generating capacities have yet to be tapped by government. 

“I think we have sufficient power. Let us revisit our numbers,” Osmeña said at the Senate Committee on Energy hearing on the proposed joint resolution to grant emergency powers for Aquino to avert brownouts in 2015.

‘We have enough. You can blame me if we have a brownout.’

– Senator Sergio Osmeña III, committee on energy chairman

The breakdown of the 815 megawatts are as follows: roughly 400 MW from brand new plants coming onstream and another 400 MW within the Meralco franchise who committed to use specific megawattages of their generator sets during the concerned period.

Osmeña, who chairs the Senate Committee on Energy, told Rappler he is confident more private companies like malls and factories will be convinced to offer 300-400 megawatts additional capacity under the voluntary Interruptible Load Program (ILP) within the next 30 days if the terms are explained to them well.

The senator said that on top of the 815-megawatt computation there are also several cement companies and locators with sizeable generator sets that have not been approached by government, the 79-megawatt capacity owned by the government not registered in the Energy Regulatory Commission, and more megawatts coming from wind energy projects, among other sources.

Up to 900 MW shortage

The Department of Energy (DOE) continues to adjust its projected shortage from the original 200 megawatts to the current 900 megawatts because of the announcement of state weather bureau PAGASA of a mild El Niño, the shutdown of the Malampaya power plant, and the delay in the commissioning of power projects. 

The DOE is seeking emergency powers for Aquino under section 71 of the Electric Power Industry Reform Act (EPIRA) to allow the government to address the shortage. Energy Secretary Jericho Petilla was looking at additional 300 MW capacity costing about P6 billion ($134.5 million*), which would come from the Malampaya fund, to purchase or rent existing plants and capacities.

But the ILP solution is simple and does not need additional powers. Private companies have generator sets with capacities that can be more than their power requirements.

Osmeña said they should commit to use their generator sets instead of connecting to, say, Meralco, to help ease the demand during the period of shortage. This was done in Cebu during a power shortage after the onslaught of typhoon Yolanda. 

“There is an incredible amount of megawattage available. The list shows 3,169 megawatts for Luzon for generating units from 1 megawatt and above….So we don’t waste resources of the country if we can undertake it through locally installed self-generating units,” he added. 

This is more than half of the 5,200-5300 MW peak demand in the Meralco franchise area.

Emergency powers are not required because existing mechanisms are in place to compensate the private companies, he said. The generator sets may suffer wear and tear but Osmeña said businessmen should look at it as their contribution to the country.

DOE submitted a draft resolution on Thursday morning. What it wants to do, explained Osmeña, is “to be able to buy or lease diesel generating sets from abroad, delivered here and installed in order to increase our reserves.”

In the committee hearing, Petilla also talked about renting or purchasing the capacities of the private companies Texas Instruments and AMKOR, for example, and connect them to the grid so they can be tapped by other consumers.

Texas Instruments has 45 megawatts but loads only 30 megawatts. AMKOR has 33 megawatts but loads less. One megawatt can power at least one building, according to estimates.

But Osmeña said this may not be necessary if there are enough private companies and even private individuals that will commit to use their generator sets. Issues on compensation may be discussed with the government, he added.

Lessons from the 1991 crisis

Osmeña said granting the President additional powers can be disastrous, a lesson learned after Congress gave President Fidel Ramos the power to address the then crippling power crisis power without bidding, to hasten the process. It resulted in high power rates – among the highest in the region – that persist to this day.

Osmeña recalled how such power was “abused.” Osmeña said Ramos kept on signing contracts inspite of warnings that the country will face an oversupply.

“The moment we come in with political solution, then it becomes a disaster as far as economics of the industry is concerned. Right now, Mr Secretary, the mere fact that we are announcing we have a shortage is just showing the whole world that these guys can’t even handle their affair properly,” Osmeña told Petilla during the hearing. 

The lessons of the 1991 power shortage led to the EPIRA law passed in 2001. “The committee as much as possible wants to keep to word the policy that we gave the whole world in 2001 when we passed the EPIRA into law. Hindi na papasok ang government (The government won’t intervene),” said Osmeña.

“We’ve always been resisting political solutions when economic problems can work themselves out,” he said. – Rappler.com

 *$1 = P44.6

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