MANILA, Philippines — The Department of Energy (DOE) and stakeholders have come up with a plan to ensure sufficient power supply during the upcoming months of high electricity demand.
The plan involves the implementation of a so-called “gas swapping arrangement” as a solution to the projected shortage of electricity supply from March to July.DOE officials and representatives of First Gen Corp., Prime Energy, Manila Electric Co. (Meralco) and South Premier Power Corp. (SPPC) met on Dec. 27, 2022 to discuss the plan.
The proposed arrangement involves the implementation of a “gas swapping” deal that will send at least 80 million standard cubic feet per day of First Gen’s
Malampaya banked gas allocation to operate SPPC’s Ilijan power plant in Batangas.
Subject to Prime Energy confirmation of available Malampaya gas volume, First Gen’s First Gas Power Corp. proposed to run two units of its Santa Rita power plant on liquid fuel oil, making available to Meralco around 80 million standard cubic feet per day of Malampaya gas volume, which the power distributor can then allocate to Ilijan to make available 500 mega-watts (MW) of the plant’s one unit.
Based on the minutes of the meeting, SPPC said that while the Ilijan plant can run on diesel, the price of diesel is double that of the liquid fuel oil that First Gas can use for Santa Rita, which is less favorable for power consumers.
First Gas said its primary objectives in agreeing to the arrangement are energy security and consumer welfare.
First Gas will need two months lead time to secure additional liquid fuel oil deliveries for the gas swapping arrangement.
With the summer months being the critical period, the gas swapping arrangement is targeted to commence in March at the earliest and last until June at the minimum.
Meralco, however, said that while the gas swapping arrangement would allow for supply adequacy and reliability for consumers in the Luzon and Visayas grids, it may result in additional costs to customers for instances when running Santa Rita on liquid fuel oil is more expansive than purchasing from the electricity spot market.
The DOE has committed to help those involved in the gas swap arrangement secure permits and hurdle bureaucratic processes at the shortest time possible, including endorsement to the Energy Regulatory Commission.
“It’s a win-win solution where no one loses but everyone benefits,” said a DOE official, speaking on condition of anonymity.
“Thanks to the foresight of our secretary, this plan would be in place to ease worries about power supply when demand rises in March to July,” the energy official added.
DOE estimates placed the potential shortage of electricity in the so-called peak months at up to 1,000 MW.
Based on its latest outlook, which factors in the projected forced outage ranging from 500 to 600 megawatts (MW) for the entire year along with the operation of existing and committed power plants, the agency expects the Luzon grid to initially be free from red alerts this year, but may encounter yellow alerts possibly for several weeks, including the entire month of May.
“We are here to assure the public that we are prepared and we are not going to let our people down as far as power supply stability is concerned. We are taking this proactive stand so there would be no need for our businesses, our consumers and especially those relying on continued supply of power to worry,” the DOE official said.