MANILA, Philippines - The Management Association of the Philippines (MAP) said yesterday that it was in favor of Energy Secretary Rene Almendras and the government’s position on the energy problems in Mindanao.
MAP is a management organization whose 793 members represent a cross-section of chief executive office, chief operating officers, and other top management practitioners from the largest local and multinational companies operating in the Philippines. MAP also counts some top management educators and government officials as its members.
In a statement, MAP said that the Leyte-Mindanao interconnection must be revitalized, and that the Wholesale Electricity Spot Market (WESM) must be initiated.
It further stated that there was too much dependence on hydro plants which account for 53 percent of the region’s power supply, and that Mindanao lacked a reliable baseload plant that will provide steady supply throughout the year.
MAP cited that Mindanao only has 37 percent of baseload plants compared with Luzon at 67 percent and Visayas 76 percent.
It added that there is a prevailing reluctance of power utilities to contract private suppliers at rates higher than the National Power Corp. (Napocor) grid rate of P2.93 per kilowatt-hour (kwh).
“It is an appropriate time that this problem be resolved with finality. MAP believes that with a concerted effort by all sectors - government, private sector, non-government organizations (NGOs), as well as the consumers - to seek a sustainable solution, this problem can finally be put to an end,” the management trade organization said.
MAP explained that through WESM excess or in-contracted generation capacities in Luzon and Visayas were made available with the grid for trading. Having true market price signals is the best way to call forth new supplies.
“Moreover, the successful commercial operations of WESM will require the privatization of the NPC assets in Mindanao in order to eliminate distortions in market pricing caused by government ownership and subsidies,” it noted.
It likewise urged that the National Grid Corp. of the Philippines (NGCP) get started on the Leyte-Mindanao interconnection “in order to allow sharing of reserves among Luzon, Visayas and Mindanao.”
This will enable the grid to properly make use of and even share its hydro resources with other grids when there is sufficient water supply and at the same time benefit from the reserves of other grids during periods of drought.
MAP insisted that without the ability to share reserves, Mindanao would need to provide reserves equivalent to almost the whole capacity of the Agus and Pulangi plants or a reserve level of 50 percent of supply compared to a more prudent level of 23 percent. This situation will make electricity prohibitively expensive on the island.
“On the other hand, calculations of experts show that the interconnection investment, if shared by all the three grids, will only cost the consumer between P0.17-0.19 per kwh,” it pointed out.
MAP also stressed that the Leyte-Mindanao interconnection would reduce the aforementioned 300-400 megawatt (MW) baseload needed in the next four to five years. It likewise opens up power contracting and competition across the other grids as well as diversifying Mindanao’s generation sources.
The statement explained that the average summer demand on a daily basis amounts to 1,202 MW. However, a well-planned grid should not only account for the average demand but also have contingency measures for the hottest day of the year.
Thus, the targeted supply should amount to 1,350 MW inclusive of a minimal reserve of at least 12 percent although it insists that the ideal level is 23 percent.
Due to technical and commercial reasons, the available supply amounts to only 1,290 MW, thus, the actual shortage ranges from 60 to 80 MW. A typical customer would experience one to two hours of blackouts a day, rotated among areas in the Mindanao grid.