Solving transmission ROW problems

What can regulators do to help the National Grid Corp. of the Philippines (NGCP)? Apparently, a number of transmission projects, if these had already been up and running, could have been solutions to our power supply shortage.

In my column last week, I discussed the problems that distribution utilities like Meralco face because of the continued uncertainty of reliable power supply caused by delays in the construction of new base load power plants.

A few days before my column came out, the NGCP had warned of a looming power supply shortage in Luzon this summer. NGCP did not specifically point to a shortage in power generating capability, instead it urged regulators and authorities to “take a closer look at the shifts in peak demand and strategize short and long term solutions to address the ever increasing need for power vis-à-vis power consumption trends.”

Apparently, according to the transmission firm, there “appears to be a shift in the way consumers use power. Luzon’s annual peak demand was long driven by increased use during the hot summer months. Mindanao and Visayas peak usage usually occur at the end of the year.”

This time around, according to NGCP, while peak demand in Luzon continues to be the same during the same months, the peak demand for Visayas and Mindanao has moved to the summer months too.

Obstructions

With regulators moving heaven and hell to unravel the kinks that power generating companies face in getting new projects off the ground as well as for Meralco to secure power supply agreements, the NGCP also needs help in getting transmission projects up and running.

The culprit, it seems, continues to be right of way (ROW) obstructions, a matter that has also plagued the telecommunication industry’s capability to bring connectivity to the far reaches of the country and at faster speeds. ROW problems also hamper construction companies involved in getting the government’s flagship infrastructure projects moving according to schedule.

The power sector may eventually be able to procure the ideal amount of generating plants in the coming years, but if transmission projects are delayed, electricity will not be able to reach consumers. This was the gist of Senate Committee on Energy chairman Sen. Win Gatchalian’s statement in December last year calling for the Senate to look into the 33 projects under NGCP’s transmission development plan.

Gatchalian noted that “even though we have a lot of power plants that are going into the system, if we don’t have enough capacity in the transmission lines, or the transmission lines will not be put up, then we will have problems with electricity shortage.”

Delayed projects

According to NGCP’s development plans, five projects for the Luzon grid have been delayed. These are the: Hermosa-San Jose 500 kV transmission line, 500 kV backbone line, Western 500 kV backbone (Stage 1) line, San Jose-Quezon 230 kV Line 3, and Pagbilao 500 kV substation.

For the Visayas grid, four projects were also highlighted: the Visayas Substation Reliability I and II, the Cebu-Negros-Panay (CNP) Stage 1 line, the Cebu-Lapu Lapu 230 kV transmission line, and the CNP Stage 3 line.

For the Mindanao grid, the Mindanao 230 kV transmission backbone needs to start this year. Equally important would be the Mindanao to Visayas interconnection project that will allow the export of 400 megawatts of power from Mindanao.

Holistic solution needed

ROW obstruction issues, in general, may need to be carefully studied so that a meaningful solution is arrived at. This was also a challenge faced by the National Transmission Corp. (TransCo) and National Power Corp. (Napocor) in the past, but they were able to address ROW concerns to consistently build transmission capacity ahead of the need.

Being state-owned may have opened doors for TransCo and Napocor to transcend the bothersome details that accompany ROW issues. Thus, there may be lessons that can be learned and applied for private companies that involve projects of national significance.

With the privatization of the power sector, regulators should look at what is needed in today’s environment to tackle ROW issues. Positive moves on both sides would be appropriate rather than allowing the problem to remain unresolved, thereby negatively affecting the power supply situation.

Regulators need to make sure permits and contracts are processed on time. In the same breath, power generation companies must make sure that their committed projects are built on schedule. We need a holistic solution for this recurring supply problem.

Lowering electricity rates

It has been almost two decades since the Electric Power Industry Reform Act (EPIRA) was signed into law, and while lawmakers rightly have called for its review, some of its more relevant parts seem to be falling in place. Finally!

The biggest change from the previously state-dominated and -controlled business model is the shift of power generation ownership to the private sector. While critics may point out that only a few companies dominate the industry, taxpayers can now breathe easy that Napocor is no longer the state liability it was at the turn of the century.

The wholesale electricity spot market (WESM) is also shedding its awkward operational beginnings, and while there remain areas that could be improved, consumers are already seeing the benefit of low electricity rates when there is abundant supply.

While fossil fuels continue to account for a major share of the country’s generation mix, renewable energy generation notably from solar, hydro and wind are gaining popularity among companies that see some value in incentives outlined by recently passed laws.

Hopefully, as EPIRA enters its third decade, Filipinos will start to really to see stable electricity supplies and at lower prices.

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