Amid hints of a production slowdown in Luzon when power plants dependent on natural gas supplied from the Malampaya field as fuel shut down for main-tenance this month, the Pa-lace yesterday said that power supply in the main island will be sufficient next month and apprehensions about a supply shortage were misplaced.
Presidential Communications and Operations Office Secretary Sonny Coloma said that the fears of a shortage in electricity supply was the result of a wrong interpretation of color codes being used by the National Grid Corporation of the Philippines in sizing up stocked energy.
It was, however, Deputy presidential spokesman Abigail Valte who indicated that a power shortage might be unavoidable this month adding that President Aquino had instructed the Department of Energy (DoE) to meet with the power grid operator National Grid Corp. of the Philippines (NGCP) and dominant electricity distributor Manila Electric Co. (Meralco), to thresh out contingency measures aimed at preventing brownouts from affecting Luzon.
Valte said the government is instituting measures to cushion the power shortage which will likely happen when power plants getting fuel supplies from the Malampaya natural gas facility and some other Luzon power plants are shut off for maintenance.
“We got to talk yesterday with our co-workers from the energy department, who gave an assurance that the DoE, the NGCP and Meralco are closely coordinating in anticipation of the Malampaya (being cut) offline, I think sometime July,” Valte said.
The NGCP has placed the Luzon grid on a yellow alert last week citing the supply of electricity being just enough to meet the demand during peak hours.
Thus Coloma said there was no reason for factories in Luzon to reduce production or impose forced holidays on workers even this month when the Malampaya natural gas-fed power facilities go “offline.”
Claiming that government and private energy facilities have more than enough stored energy seen to keep industries away in Luzon from operational break and work stoppage, Palace officials also similarly warded off reports of a power shortage this month and  discounted the possibility of reduced production output by the Luzon-based industries.
Coloma told the Tribune that factories would be able to sustain production without fear of power interruption and claimed there was “more than enough energy stock,” even in the event that the Malampaya facility goes offline for its routine maintenance.
In discounting of fears of imminent rotational brownouts adversely affecting productivity, Coloma has instructed the government information and media bureaus to engage in a massive information campaign to douse apprehensions of major power users primarily industries and the workforce who are dependent on these factories.
Valte added the DoE has commenced implementing measures designed to fill the power gap coming from the Malampaya facility, which has already announced a halt in operation to give way for regular plant maintenance.
“We don’t agree on reports of an imminent power outage. In fact, no less than the NGCP said that their power indicator is no longer on the yellow alert,” Valte said.
The NGCP in mid June went on yellow alert as the power reserves of Luzon fell below 647 megawatts (MW). The NGCP said a “yellow alert” was a system condition where the total of all reserves is less than the capacity of the largest plant online, which for the Luzon grid was 647 MW.
Acting on the directives of Aquino, Energy Secretary Jose Rene Almendras maintained constant communication with several power-generating companies to ensure a sufficient supply of power.
Aquino last week instructed the DoE to coordinate with the NGCP and Meralco to thresh out contingency measures aimed at preventing brownouts, Valte said.
“And because of the tight monitoring and coordination, it seemed fears of an imminent rotational brownout isn’t even close to occurring” the Palace mouthpiece added.
Valte however would not make a categorical confirmation or denial that the decision of the Energy Regulatory Commission to approve Meralco’s petition for a maximum average price (MAP) of P1.6303 per kilowatt-hour (kwh) for distribution, supply and metering charges to different customer classes, had something to do with the measures in place to prevent power outrage in Luzon.
“We will leave it up to the ERC to answer as to what their basis is for saying that there should be a hike for the customers, for the clients of this particular distributor,” Valte quipped.
The president of the Cebu Chamber of Commerce and Industry (CCCI), however, demanded that government review the pricing of power in the Philippines which he said was higher than that of any other countries in Asia if not the world.
”Unless this is properly addressed, we could always expect power rates increases from time to time by power generators and distributors,” CCCI president Prudencio Gesta said.
He said any increase in power rates will automatically trigger an increase in the operating expenses of businesses. In most instances, businesses pass on power expenses to consumers, he said.
Businessman Robert Go, CCCI past president and chair of the Economic Development Committee (EDC) of the Regional Development Council (RDC-7), said high power rates in Cebu “wiped out the profits” of several business firms last year.
Go said the high electricity rates contributed to the increase in unemployment because foreign investors, including those who used to locate at the economic zone under the Philippines Export Zone Authority (PEZA), have transferred to Thailand, China, Indonesia and Vietnam.
Earlier, general manager Peter Seneres of the Cebu Electric Cooperative (Cebeco) 2 said they were buying power fired by natural gas from Forum Explorations Inc. and Desco Inc. in Bogo City at P5.50 per kwh.
On the other hand, it also buys power at P7 per kwh from either Kepco SPC Power Corp. in Naga City and Cebu Energy Development Corp. (CEDC) in Toledo City, which are both sourced from coal-fired power plants.
But Seneres said the problem is that Forum and Desco only produce one MW of power compared to Kepco’s 200 MW and CEDC’s 246 MW.
Aaron Pedrosa, secretary general of the Freedom from Debt Coalition (FDC), said the Energy Power Industry Reform Act (Epira) should be amended because under this law, the cost of doing business was socialized but big players in power generation, transmission and distribution are allowed to rake in profits.
ERC Visayas director Joel Bontuyan said the Philippines had higher power rates because these reflect the true cost of electricity.
He said power is cheaper in other countries like Indonesia because it is subsidized by its government.
The DoE also earlier advised the Subic Bay Metropolitan Authority that any postponement ofthe proposed 600-MW coal plant inside the freeport may lead to massive blackouts in Luzon within the next five years.
Almendras said he discussed this with Subic Bay Metropolitan Authority administrator Roberto Garcia and emphasized the vital need for increased capacity in the Luzon power grid.
“I met with them to explain how important it is to build another power plant. We really cannot afford not to have a new power plant by 2015,” he said.
The SBMA is opposed to the construction of the coal plant due to carbon dioxide (CO2) emissions that may adversely affect the health of communities and the environment in Subic.  Almendras said however that the latest technology could mitigate CO2 emissions as exemplified by the 660-MW Masinloc coal plant.
“The question of whether it will be polluting or not has already been answered. Masinloc is one of the cleanest coal plants in the world,” he said. The energy secretary said the Aquino administration is committed to provide energy security in the next five years.
Long-time Zambales resident Roger Bound, a founding member of the Zambales Resort Owners Association and director of the organization’s life-saving program, said the large majority of local resort owners and businessmen also support the project. Bound explained that “aside from the steady and reliable stream of electricity, the economic advantages of the multi-billion peso project will also be a great boon to the local community. Not to mention that the technology to be used is state-of-the-art and environment-friendly.”
Bound added that with the huge increase of electricity usage in Central Zambales in the last three years alone, they were all becoming concerned that the country would go back to the years of rolling brownouts that Filipinos experienced in the 90’s. “Most local businesses here especially resorts and leisure parks would suffer financially if that were to occur again.”
The Subic coal plant is being developed by Redondo Peninsula Energy, Inc.  It will use two single high-efficiency 300-MW units for a total net generating capacity of 600 MW.  The project is estimated to cost $1.28 billion.