Press Release
March 2, 2015

Senate okays resolution to address power shortage;
seeks to amend Bio Fuels Act

The Senate has approved on third and final reading a Joint Resolution which would allow President Benigno Aquino III to address any potential power shortage during the summer.

Senator Serge Osmeña, chair of the Committee on Energy and the sponsor of Senate Joint Resolution 12, said the measure would authorize the President to address the projected imbalance of power supply and demand in the Luzon grid, particularly in the months of April and May of this year.

Senate President Franklin M. Drilon, author of the resolution, said that it was important for the country to avert a critical electricity situation due to the expected effects of the El Nino phenomenon, the 2015 Malampaya turnaround and continuing outages of power plants, which could affect both businesses and ordinary homes.

"If we did not act, then it would have been a great inconvenience and grave disservice to our citizens, especially ordinary Filipinos who will have to endure the summer season without electricity," he said.

Apart from bringing a solution to the foreseen summer outages, Drilon said that the resolution was part of efforts "to establish a clear energy agenda and to address the growing concern over the perceived inability of the country's power sector to keep up with the growing demand that is intricately linked to the Philippine economy's immense economic growth."

While the average electricity demand was projected at 8,700 MW, Osmeña said, the highest demand of power on the hottest day and hour in April and May would peak at 9,000 megawatts (MW).

"Having 9,000 MW guarantees a brownout since a certain number of power plants break down while some go on scheduled maintenance because no power plant could operate continuously the entire year," he explained.

Osmeña said the resolution proposed "a more efficient way to solve the power crisis in a much cheaper way" than what the executive department earlier recommended.

He said the President would not be given a blanket authority under the resolution nor would it provide exemptions from existing laws such as the Clean Air Act and the Clean Water Act.

"The resolution is not mandatory and would enable productions from hydro and gas plants to be tweaked," Osmeña said.

The House version of the bill included the suspension of pertinent laws, rules and regulation and made it mandatory for self-generating facilities to participate in the Interruptible Load Program (ILP), a provision not found in the Senate version.

Under the ILP, owners of generating sets would be asked to deload from the Luzon Grid and to use their own gensets at certain hours.

Osmeña said the adoption of the ILP would cost consumers a low P7 to P8 per kilowatt an hour as compared to the P35 per kilowatt an hour under a Department of Energy proposal to lease 300 MW in gensets at a cost of P6 billion for two years or P10 million per MW.

"In this manner, up to 1,400 megawatts may be deloaded for a few peaking hours on certain days," he said.

He said Mindanao and Cebu had adopted the ILP system since 2010 due to the chronic electricity shortages in the areas.

Meanwhile, the Senate also approved Senate Bill 2622 on third and final reading today. The measure seeks to exempt power plants from the mandatory implementation of Republic Act No. 9367, otherwise known as the Biofuels Act of 2006.

Osmeña said Senate Bill 2622, which would augment power supply when the Malampaya natural gas experiences supply shortages, would allow natural gas plants to use pure or neat diesel as their alternative fuel.

"The Biofuels Act mandates the use of biodiesel. Pure diesel cannot be utilized anymore anywhere in the Philippines, and since the power plants were built before Congress passed the Biofuels Act in 2006, they are not geared to deal efficiently with biodiesel, which clogs their filters," he explained.

He cited the Korea Electric Power Company (KEPCO), owner of the 1,200 MW Ilijan gas plant, which decreased its production rate from 600 MW to 420 MW, or a difference of 180 MW per power plant, because of its use of biodiesel.

Osmeña said an exemption from the Biofuels Law would allow the Ilijan gas plant to deliver 160 more megawatts.

Osmeña, however, said the exemption has limitations. He said the exemption could only be invoked when (1) there is a supply shortage as determined by the DOE; (2) the pure or neat diesel is an alternative fuel of covered plants; (3) the use of the pure or neat diesel will solely be for the production of electricity; and (4) the exemption will be only for the duration of the supply shortage.

Osmeña said the Committee on Energy had consulted and coordinated with more than two dozen agencies, groups and parties to come out with alternatives to avert the looming power crisis. "The intent is to optimize existing assets and to bring down the average cost of electricity for the benefit of the consumers," he said. (Pilar S. Macrohon)

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