The Aquino administration has made significant headway in the energy industry a year after taking the reins from the previous administration.
In the power industry, the Department of Energy was able to dramatically reduce power shortage, thereby avoiding crippling power outages that would have affected the country’s economy.
The DOE succeeded in making power supply more reliable in Luzon. With the Grid Operation Management Protocol (GOMP) in place, no brownouts were experienced due to shortfall in power generation, except during emergency situations such as typhoons and landslides.
The DOE was also able to improve market surveillance at the Wholesale Electricity Spot Market (WESM), allowing consumers to enjoy lower electricity rates compared to previous administration due to lower spot prices in the electricity market.
Power availability in the Visayas during the previous administration was lower than the demand in the region. The Visayas power supply capability is just 1,043 megawatts (MW) while the demand is 1,164 MW.
Under the Aquino administration, Visayas now has surplus power of about 600 MW, with the commissioning of new power plants such as the 240-MW Coal-Fired Power Plant (CFPP) of Cebu Energy Development Corporation (CEDC), 160-MW CFPP of Panay Energy Development Corporation (PEDC), and the 200-MW CFPP of the Kepco-Salcon Power Corporation (KSPC).
The commercial operations of the WESM which started in December 2010 also attracted more power investors to engage in doing business in the Visayas. The WESM also allowed dispatching of all available power generated at a reasonable price increase.
The WESM provides better market condition and structure to entice more investors to address future power needs.
Before the entry of the Aquino administration, Mindanao suffered eight-hour rotating brownouts.
Now, the brownouts were reduced with the improved GOMP and with the issuance of the DOE circular mandating the rational utilization of available generation capacity in Mindanao and directing DOE-attached agencies, the National Grid Corporation of the Philippines, and all industry stakeholders to address the power supply situation in the region.
Meanwhile, the encouraging structures continue to attract new businesses to invest in power generation.
The generation and sale of electricity used to be an inherently inefficient monopoly system. With the establishment of a WESM, electricity is traded centrally and more efficiently.
There are now 180 market players in both the Visayas and Luzon spot markets. This means that the more players there are in the market, the more stable and reliable the supply of electricity and the better the price will be for consumers.
The Philippine power industry continue to attract more players. Indicative power projects will boost electricity supply by more than 1000 MW.
Solar-powered and coal-fired power plants will soon rise in Pangasinan, Cebu, Iloilo, Misamis Oriental, Davao del Sur, and Subic Bay while expansion is seen in coal power plants in Masinloc, Quezon and Calaca.
The new coal facilities will utilize clean coal technology. Coal is also relatively cheaper and its dominance as source for baseload can thus help reduce the price of electricity.
Renewable industry players
More players are also expected to enter the power industry with the Renewable Energy Act of 2008 which aims to promote the use of natural energy resources such as power from the sun, ocean, hydro, wind, geothermal, and biomass.
The DOE is currently reviewing 234 existing contracts for solar, wind, biomass, geothermal and hydropower projects to ensure that they will contribute to the available power in the country.
Renewable energy is being promoted in the provinces where it is most abundant. Six electric cooperatives have already committed to provide electricity using solar energy in their franchise area. Likewise, the government is relying on solar energy to provide electricity to far flung areas in the country.
The government strengthened its efforts in promoting renewable energy in the country starting with the unveiling of its National Renewable Energy Program (NREP) containing the Philippines “green energy” roadmap.
The NREP is anchored on the DOE’s Energy Reform Agenda which aims to provide a sustainable energy plan for the Philippines. It also establishes a framework for existing and planned policies for the promotion of renewable energy such as solar, hydro, ocean, wind, biomass, and geothermal power as well as a roadmap which will guide efforts toward actualizing the market penetration targets of each renewable energy resource in the country.
The program further seeks to maximize the renewable energy potential estimated at more than 200,000 MW and translate clean energy opportunities into long-term benefits for the people.
Energy Secretary Jose Rene Almendras described NREP as “a focused and sustained drive towards energy security and improved access to clean and affordable energy.”
President Benigno S. Aquino III, who gave the keynote message during the event, emphasized that the development of clean energy is one of the immediate priorities of the government and that it will keep a “watchful eye” in ensuring that policies and guidelines will provide a level playing field, transparency and fair electricity pricing.
The government also resumed the sale of power assets in the second half of the year.
The Aquino administration thoroughly studied the privatization process before pushing forward with the sale of the remaining power generation assets and contracted capacities, starting off with the independent power producer administrator contract for the 149-MW Naga power facility.
The 640-MW Unified Leyte geothermal complex would likewise be pursued within the third quarter. The auctions will still be conducted by state-run Power Sector Assets and Liabilities Management Corp. (PSALM).
At the same time, the DOE pushed the implementation of the Government Energy Management Program (GEMP) which resulted to millions of savings.
Energy efficiency pushed
The Don Emilio Abello Energy Efficiency Awards which has 61 industrial, commercial and transport companies and 39 outstanding energy managers as participants were able to save a total of 156 million liters of oil or P5 billion.
It also resulted in the reduction of emissions equivalent to 269,000 tons. Likewise, the DOE also conducts Energy Audits to make sure that government buildings and offices are using energy efficiently. Energy savings reached P24.6 million after 12 energy audits for industrial, commercial, academe and government buildings.
To further educate the people on conserving energy, the DOE conducts National Training Workshops on Energy Efficiency Conservation which aims to save the country P60 billion more in terms of energy usage.
PECR launched
To further promote energy security, DOE unveiled the 15 areas up for exploration for oil and gas through the Fourth Philippine Energy Contracting Round (PECR 4).
The formal launch of the contracting round held on June 30, 2011 comprised of three onshore and 12 offshore regions with a total area of more than 10 million hectares located in Northwest Palawan, East Palawan and Sulu Sea basins.
The contracting round is expected to attract investments in exploration activities which will contribute to the realization of the country’s energy self-sufficiency level target of 60 percent by 2011.
The contracting round is envisioned to address the country’s energy supply through the exploration of local indigenous resources. Harnessing local resources will help the country meet its daily demand and reduce the importation of petroleum and petroleum products.
Independent and large-scale international exploration companies who have attended the previous DOE roadshows in Singapore and Australia have already expressed their interest to tender their bid in the various blocks for offer.
Pantawid Pasada
A landmark move of the Aquino administration is the Pantawid Pasada Program for the transport sector.
The DOE-led Inter-agency Energy Contingency Committee (IECC) crafted the Public Transport Assistance Program (PTAP), more popularly known as the Pantawid Pasada Program in aid of the transport sector amidst vulnerable oil price movements.
The nationwide targeted assistance program aims to help jeepney and tricycle drivers through financial support. Jeepney drivers are given a Pantawid Pasada card loaded with P1,050 which they can use at gasoline stations for fuel purchases, while tricycle drivers are programmed to receive P150 from the Department of Interior and Local Government.
Around 220,000 jeepneys and one million tricycles are expected to benefit from the program.
The DOE is also aggressively promoting the National Electric Vehicle Strategy to alleviate the country’s overdependence on conventional fuel for transportation.
Twenty electric tricycles are now plying the streets of Mandaluyong after the government turned over the said “green vehicles” to the city Government through financing of the Asian Development Bank (ADB).
The said tricycles will not only save the tricycle drivers money as they no longer need to buy conventional fuel but will also help reduce greenhouse gas emissions.
Promoting Good Governance
The DOE, through its Information and Education campaigns, go around the country to present the challenges, activities, and operations in the power sector to achieve power sustainability.
The DOE conducted briefings in key cities such as Cagayan de Oro City, Bacolod City, Tacloban City and Davao City and is set to go to other provinces in the coming months.
The DOE also formulated the Energy Reform Agenda which has an overall vision of “Level Playing Field, Walang Lamangan”.
This agenda aims to provide energy security, reasonable energy price and a sustainable energy system through the help of private investors. Attached agencies of the DOE also applied good governance in their operations. The Philippine National Oil Company (PNOC) was able to give savings to the government as it trimmed down the costs of the PNOC-Philippine Alternative Fuels Corporation for its jatropha project.
The National Electrification Administration (NEA) has also sent a signal to all other electric power industry participants that market/economic discipline will seriously be implemented in the Aquino administration as it took over the operations of the Albay Electric Cooperative due to its failure to comply with its financial obligations.
The government’s power privatization arm, PSALM, also paid P11.435 billion worth of financial obligations of electric cooperatives to NEA, and the local government units. [PNA]