DOE expects stable power supply in Visayas

CEBU CITY , Philippines  — The Department of Energy expects that power supply in the Visayas grid to remain stable until the national elections in May.

In a presentation during the Visayas power stakeholders’ meeting here, National Grid Corp. of the Philippines (NGCP) head for Visayas systems operation Raul Galano said the government, in cooperation with the private sector, will implement short-term measures to maintain stability in the Visayas grid.

Among these measures are the completion of Salcon Power Corp.’s Cebu Thermal (50 MW) and accelerated testing of Cebu Energy Development Corp.’s new generating unit (82 MW).

The participation of embedded generators in the voluntary load curtailment (VLC) will also be encouraged.

On the transmission side, the NGCP implemented last month the maximization of the Leyte-Cebu submarine cable loading up to 400 MW.

The Visayas power deficiency was at 39 MW as of Feb. 23 with available capacity at 1,129 MW while peak demand at 1,167 MW.

On election day itself or May 10, NGCP is estimating that the power reserves in Visayas would be at 62 MW.

While supply in the Visayas and Luzon grids are relatively stable, Mindanao’s grid remains a challenge. As of Feb. 23, Mindanao island’s power deficiency widened to 358 MW from only over 200 MW days before. Mindanao’s available capacity stood at 842 MW compared to peak demand of 1,200 MW as of Feb. 23.

As this developed, the Philippine Electricity Market Corp. (PEMC) reported yesterday that the Wholesale Electricity Spot Market’s final prices for the period covering Dec. 26, 2009 to Jan. 25, 2010 showed an average market price or effective settlement price (ESP) of P4.56 per kilowatthour (kwh), higher than the previous month’s ESP of P3.66 per kwh and the January 2009 ESP of P1.88 per kwh.

“Market prices for the past months are lower than the National Power Corp. (Napocor) effective rates,” PEMC president Melinda L. Ocampo said.

About 14 percent of total market transactions for the January billing period were actual purchases from the market, while 86 percent were reported to have been sourced from bilateral power supply contracts, which were settled outside the WESM.

“We emphasize the percentage of bilateral power supply contract transactions as these are not affected by the prices at the WESM. For the January settlements, the prices in the WESM only affected about 14 percent of the total consumption,” PEMC executive vice president Mario R. Pangilinan said.

This follows that the impact of high market prices is highly dependent on a distribution utility’s amount of power purchases or exposure in the WESM. In cases where spot rates are really expensive, DUs always have the option to maximize their bilateral contracts.

The higher prices for January were driven, in part, by the increase in demand brought about, in turn, by the higher temperatures during the period. Change in the energy mix was also observed. Supply capability of hydroelectric power plants declined as the El Nino phenomenon has resulted in the drying up of the water reservoirs while some coal and natural gas plants were unavailable, resulting in the increased utilization of diesel and oil-based plants.

“WESM is a market. Regardless of the type of commodity it is selling, it is highly affected by market forces, by supply and demand interaction as well as temperature change and the utilization of different types of power plants whether hydro, coal, diesel, etc. which ultimately affect prices at the WESM,” Ocampo said.

Prices were originally expected to rise during the month with natural gas plants on outage during the scheduled maintenance of the Malampaya platform and pipelines as well as with Limay combined cycle on deactivated shutdown preparatory to turn over from Jan. 11 to Feb. 17.

Contrary to these expectations however, average prices at the WESM remained below P11 per kwh from Feb. 11-18 when system conditions were at its most unstable.

The WESM began commercial operations in Luzon in June 2006. It is a centralized venue for buyers and sellers to trade electricity as a commodity where its prices is based on actual use (demand) and availability (supply).

The WESM was created by Republic Act 9136, the Electric Power Industry Reform Act (EPIRA) of 2001. This provided for the establishment of an electricity market that reflects the actual cost of electricity and lowers its price through more efficient production through competition.