FAA OnLiNe

Tuesday, December 20, 2005

‘IT’S NOT ENOUGH’

ERC PA CAN’T SUSTAIN PPC

By Francis Allan L. Angelo

THE provisional authority (PA) granted by the Energy Regulatory Commission (ERC) to Panay Electric Company (Peco) may not be enough to ensure steady supply of power to Iloilo City, an official of Mirant Global Corporation said.While Mirant Vice President for Visayas new Business Arman Lapus commended the ERC for acting on the financial problems of Panay Power Corporation (PPC) and averting power shutdown in Iloilo City, “the PA will not sustain PPC’s operations.”Mirant operates PPC’s 72-MW diesel-fired power plant at Barangay Ingore in LaPaz district. Lapus said the provisional generation rate of P6.5121 per kwh which the ERC allowed Peco to collect from consumers will only cover PPC’s actual expenses in running the plant including fuel cost and maintenance.“It (PA) does not allow PPC to recover its full costs, let alone generate profit. In short, we will continue to operate the plant sans any profit so we can provide Iloilo City with reliable power supply. But the ERC decision might not prevent the possible shutdown of the plant,” Lapus said.Lapus said if PPC does not recover the full generation cost soon, “we may find ourselves at risk of not meeting our obligations and defaulting on our loans and being forced out of business.”Earlier, Lapus said Peco owes PPC more than P364million since September. Meanwhile, the emergency fuel delivered by Pilipinas Shell to PPC last week will run out today which puts Iloilo City on the verge of another power blackout.But Lapus said Mirant’s top brass is in discussions with Shell and other potential suppliers to ensure that PPC continues to operate until the end of the year and through the first week of January 2006.PPC assistant vice president Adrian Moncada revealed that the Department of Energy under Secretary Raphael Lotilla is also planning to supply PPC with fuel from the National Power Corporation’s (Napocor) fuel suppliers.“We will find out today if the Napocor will augment our fuel supply until we have ironed out a deal with Shell using the ERC provisional order. We still cannot discount the possibility of a blackout in Iloilo City,” Moncada said.Still, Lapus assured that PPC is committed to take all necessary and immediate action to avoid closing down the plant to avert a massive blackout in Iloilo City.


Treñas blames past govts for power woes

By Jeehan V. Fernandez

THE power industry has an uncertain future as the government lacks the proper perspective and people who will handle the country’s energy needs.
“The problem is that past governments did not prepare to meet the demands for power,” stressed Iloilo City mayor Jerry P. Treñas who is also the president of the League of Cities of the Philippines (LCP).
The mayor particularly cited the case of Panay Island and Iloilo city in particular.
Treñas said Panay Island has no indigenous source of energy like geothermal plants.
He said only diesel fired power plants supply the energy requirements of the island which incurs high production costs due to soaring prices of oil in the world market.
“In the 90s, the government had no resources to construct power plants so the IPPs (Individual Power Producers) came in,” Treñas said.
Panay Power Corporation (PPC), the sole power supplier of the city, earlier groaned of financial difficulties brought about by the reduction of Panay Electric Cooperative’s charges.
PPC’s financial debacle almost resulted to a disastrous blackout in Iloilo City. But last Friday, Pilipinas Shell delivered bunker fuel to PPC’s 72-MW facility at LaPaz district.
The emergency fuel will run out today.
“This cloud of uncertainty has been discouraging investors in the power industry from coming into the country. The high power rates at the same time will not favor businesses,” Treñas said.
When asked for a solution, Treñas said he is open to the idea of putting up coal plants in Panay, with Semirara, Antique as the source of coal, since it is the cheapest source of reliable energy.
“As long as environmental safeguards are observed, coal plants are our best options for reliable power source,” Treñas said.
“Even right in the center of Washington DC in the United States, a coal plant is present,” Treñas added while noting his recent World Bank-sponsored study tour in the US and Europe with other Philippine local government officials.
The mayor also met with Department of Energy (DOE) Secretary Raphael Lotilla, who hails from Antique, last week to discuss long-term solutions for the power supply problem of Panay.
“Although it seemed that we have sufficient power supply, this is not accurate considering the limitations of the interconnection of the islands in Visayas. Since Panay is at the tail-end of the grid, it will only receive what is left of the grid,” the DOE chief said.
“We are already experiencing a lot of problems like rotating brownouts while the rest of Panay excluding Iloilo City has a deficit of 56.7 megawatts. Thus, a power plant must be put up on the island as a source of electricity,” Lotilla said.
“We need to install a higher plant capacity. But nobody will come to invest for it unless we are willing to pay the actual cost of power generation,” he clarified.
“As far as Panay is concerned, coal is one of the cheapest while the renewable energy is more expensive. We just have to address the policy standards and enforcement of anti-pollution measures,” said Lotilla.
(Published in The Guardian, December 19, 2005 issue)

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