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Publication Detail
CN2014-12: Averting a DOE-Projected Temporary Power Shortage in Luzon in the Summer of 2015

Until recently, no less than Department of Energy (DOE) Secretary Carlos Jericho Petilla sounded the alarm that Luzon would experience a power crisis approaching the summer months of 2015. Consequently, the DOE proposed that the President invoke Section 71 of the Electric Power Industry Reform Act (EPIRA) to avert what it deems as a likely looming “power crisis”.

Thereafter, President Benigno Aquino sought the immediate enactment of a joint resolution to authorize the President to establish additional generating capacity to address an imminent electric power shortage in Luzon for the summer months of 2015. However, instead of outright emergency powers, House Resolution No. 1533 first sought to inquire on the need to establish additional generating capacity before Congress authorizes the invoking of Section 71 of the EPIRA.

The reversal in the power outlook seems to contradict previous DOE pronouncements that Luzon would experience power supply surplus based on earlier power supply-demand outlook (as of January 2014). The DOE clarified that certain factors could lead to a power shortage in 2015: (i) the scheduled Malampaya maintenance shutdown in March to April 2015, (ii) the El Niño phenomenon which could worsen during the summer months next year, and (iii) the rescheduling and delays of commercial operations of committed power plants, among others.

Worth underscoring, however, is the temporary nature of the shortage as the DOE reckons the occurrence only in the summer months of 2015. As such, any proposed additional capacity contracted by purchasing or leasing modular generator sets (gensets) to forestall the power shortage could in the end be rendered redundant as more power plants are expected to go online by 2016. Further, additional contracted capacity would most likely be more expensive “take-or-pay” as the cost would be borne say two to five years when such capacity is meant to serve as a stop-gap measure for roughly a DOE projected four-month period. Furthermore, the actual cost of such additional capacity should be reflected and must be fully understood by consumers—not masked by any “government subsidy” even amid proposals for the use of the “Malampaya Fund”, which in reality is the Filipino people’s money anyway.

The projected shortage, as some opine, is relative to a peak demand, which refers to certain hours of the day wherein electricity demand is at its highest. Hence, what is critical in averting the temporary shortage are demand side strategies that can shave off such peak demand. Furthermore, since both the Luzon and the Visayas grids are interconnected, the power situation in these grids should be considered together.

This paper, thus, seeks to delve into the issues surrounding “thin reserves” and a projected temporary two-week power shortage, or as reckoned by the DOE a looming “power crisis” in Luzon in the summer months of 2015 that entails the invoking of Section 71 of the EPIRA, as well as the various measures being considered by the government and their implications.

Congressional Policy and Budget Research Department
Authors Keywords
MIra, Ricardo; DOE; power shortage; EPIRA;
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Published in 2014 and available for Downloaded 246 times since November 05, 2015
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