Philippines: Plant shutdowns to cut Luzon grid's July-September power supply by 2,000 MW

Philippines: Plant shutdowns to cut Luzon grid's July-September power supply
by 2,000 MW

ABOUT 2,650 megawatts (MW) of power-generating capacity will be shaved off
from the Luzon grid in the July-to-September period, owing to a number of
power plants that are scheduled to go offline.

The Department of Energy (DOE), however, is not worried, saying that the
situation would not likely result in power-outage incidents because, for
one, a cooler temperature would normally result in lesser demand for
electricity. Also, new power facilities are expected to inject power into
the grid during the eight-month shutdown of one unit of the Sual power
facility, the country's biggest coal-power source.

'We are beefing up the numbers to avert any supply problem,' Energy
Undersecretary Felix William B. Fuentebella said in an interview on
Thursday.

The 1,200-MW Sual Power Station is near the Lingayen Gulf in Sual,
Pangasinan. It is owned by TeaM Energy, which is a joint venture between
Marubeni Corp. and Tokyo Electric Power Corp.

The Sual Power Station's Unit 2 (600 MW) tripped on June 14 due to a main
generator transformer failure. It was supposed to resume operations on July
13.

However, based on a preliminary report of inspection, the main transformer
is not repairable at site, according to TeaM Energy Head of External Affairs
Froilan Gregory Romualdez III. To date, Sual 2 remains offline.

The same unit was scheduled to undergo another maintenance shutdown for 30
days, from August 5 to September 30, based on government data.

TeaM Energy said Sual 2 will not operate for a total of eight months.

'Per GE-Alstom specialists, who are the original equipment manufacturer of
the equipment, it would take six months to manufacture a new transformer,
another month for its shipping, and an additional month for installation and
commission. In total, it may take eight months for Unit 2 to be returned to
service,' Romualdez said in an e-mail. 'At the moment, we are exhausting all
possible efforts to source for a readily available transformer of similar
specifications in order to lessen Unit 2's downtime.'

Moreover, Sual 1, which is another 600 MW of power-generating capacity, will
be shut down for 30 days starting September 16.

Other power plants that will undergo maintenance shutdown from July to
September this year are the following, Santa Rita Module 30 (250 MW) on July
1 and 2 and from September 16 to 20; Santa Rita Module 20 (250 MW) on July 8
and 9 and from September 2 to 6; Santa Rita Module 10 (250 MW) on July 15
and 16; Calaca Unit 2 (300 MW) from July 17 to August 30; Southwest Luzon
Power Generation Corp. Unit 2 (150 MW) from

September 15 to October 14; and San Lorenzo Module 60 from September 21 to
October 25.

'No worries'

In all, the capacities of the power facilities that underwent and/or will
undergo maintenance shutdown in the current quarter total 2,650 MW.

The DOE has yet to determine if a yellow-alert notice needs to be issued by
the National Grid Corp. of the Philippines (NGCP). 'We have yet to get hold
of the updated demand-supply projection, but we are working on the numbers
now,' Fuentebella said.

A yellow alert means thin power reserves. It is issued when contingency
reserve is less than the capacity of the largest synchronized unit of the
grid. In Luzon, this is equivalent to 647 MW, or one unit of the Sual power
plant.

However, a yellow alert does not necessarily mean power outages or
blackouts; but it could turn to a red alert, which means power outages are
very likely to occur.

'The DOE is closely looking into the impact of the prolonged and unplanned
outage of one unit of Sual. The numbers are being updated and verified. No
worries. We're on top of it,' Fuentebella said in a text message.

For one, the third quarter of the year is considered an off-peak period
because temperature is cooler. 'The tendency is to consume less electricity.
This is normally the behavior during rainy season,' the DOE official said.

When sought for comment, Manila Electric Co. Head of Utility Economics
Lawrence Fernandez said in a text message, 'from the second quarter to the
third quarter, which is the start of rainy season, the overall average
consumption goes down by 5 [percent] to 10 percent.'

Moreover, new power plants are scheduled to come on line in the second half
of the year. 'One of which is SMC's [San Miguel Corp.] Limay plant, which
will contribute 150 MW. I think it will commercially run in November,'
Fuentebella said.

Another plant that is scheduled to inject power into the grid this year is
the 420-MW expansion of the Pagbilao coal-fired power plant.

Causers pay policy

Fuentebella said the DOE is proposing to penalize power-generation companies
(gencos) if they are found liable for causing a sudden power-plant shutdown.

The DOE has yet to firm up details on its proposed policy, dubbed as the
'Causers Pay Policy Program', but said the objective of this is to pass on
the burden to the gencos, distribution utilities and the NGCP 'if the cause
of the outage is intentional on their part, if they were negligent or
incompetent'.

'This is a proposed policy that we will seriously look into together with
the ERC [Energy Regulatory Commission] and have it tested. Basically, it
will be determined if the cause was intentional or not, if there were lapses
on their part that led to the outage, which could have been avoided in the
first place,' Fuentebella added.

The proposed policy will be formalized through a memorandum circular, which
is targeted for issuance within the year.

While the penalty is yet to be firmed up, the DOE official said the
responsible party must pay for the incremental cost of electricity. For
instance, when a power plant conks out and the DOE was able to determine
that there was negligence on the part of the plant operator, the operator
will be made to shoulder, among others, the cost related to sourcing a more
expensive fuel source, instead of passing on this cost to the consumers.

'We have load interruptions caused by forced or unplanned outage of some
plants. We want to look at how to make them accountable. It is basically
addressing that level of responsibility to the entire system,' the DOE
official added.

AC Energy Holdings Inc., the power arm of conglomerate Ayala Corp., welcomes
this plan, albeit rules must be set first.

'They should look into it. That is what they are doing now, as they should.
But in terms of explicit set of rules, well that remains to be seen,'
company President John Eric Francia said when sought for comment.

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com