DOE seeks support from power players

CEBU, Philippines – While the Visayas Supply Augmentation Auction (VSAA) is expected to address the power supply shortage in the region, the Department of Energy is soliciting support from the power industry stakeholders.

“We at the Department of Energy are positive that the VSAA will create a favorable impact on the current supply situation in the Visayas. But we can’t do it alone. We want to work with the power industry stakeholders in the region and encourage everyone to take a proactive approach with regard to the VSAA. We are here to work with you in ensuring a stable supply of power now and for the years to come,” said Energy secretary Angelo T. Reyes.

DOE, together with the Philippine Electricity Market Corporation (PEMC) are looking forward to the immediate implementation of VSAA as soon as it is approved by the Energy Regulatory Commission (ERC).

The VSAA hopes to address the growing concern for the tight power supply in the Visayas, specifically in Cebu, Negros and Panay.

“Visayas power conditions have been limited for the past two years. Until additional expected capacities come in by 2010, the DOE has to find immediate ways to address the situation or residents of the region will endure one to three hour rotating brownouts on a daily basis,” Reyes stressed.

“VSAA is a voluntary program which allows distribution utilities and large consumers of electricity to boost their supply deficit through a transparent and competitive means much like the electricity spot market in Luzon,” said PEMC Acting President Melinda L. Ocampo.

The program offers a number of options for distribution utilities for the procurement of power. This includes purchase of supply deficit from another supplier thru the VSAA apart from their existing bilateral contracts as well as voluntary load curtailment.

The successful launch of the VSAA will allow for a smooth transition to the operation of the Visayas Commercial Operations Program of the Wholesale Electricity Spot Market (WESM) which is expected to encourage possible investors to venture in the Visayas power industry, thus bringing in the competition necessary for the region.

PEMC’s 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.