Press Release
March 1, 2017

Energy Power Plants, Power Stability and Staggered Rate Increase

Brief Summary:

There is still a need for new power plants to come in, however according to Senator Win, bureaucracy and red tape are still the basic reasons investors are adamant to invest in the Philippines.

To strengthen the Executive Order of projects of national significance, Senator Win wants to exempt these projects from TRO's issued by Regional Trial Court. If projects are considered as of national significance, it should then be followed through. The EO should address right of way issues concerning transmission lines. When asked about the stability of power in the coming summer months, Senator Win assures the public of stable power as long as none of the big power plants will malfunction.

Planning is crucial in preventing power outages during maintenance shutdowns. According to Senator Win, it seemed so incredulous how previous Secretaries were just begging power plants to schedule maintenance shutdowns. this affects the pricing and market prices. "DOE needs the legislation to give them more teeth, dapat wala nang pakiusap, more on reinforcement dapat para di tayo mawalan ng kuryente," the Senator said. The Senator's proposed legislation is not yet in place, but he stressed that the end goal here is to give more teeth to DOE to prevent simultaneous shutdowns in the future. "it will be a collective effort of the system operator [NGCP] and also the DOE."

Senator Win expressed his concern in the Secretaries' plan to publicize the maintenance shutdown schedule, while it may help the GENCO's, it may have an effect on the wholesale price and WESM prices. "Ang ayaw natin dito magkaroon ng info and use that information to collude. Then again, we have to study the implications," the Senator said.

The Senator proposed that the inherent powers of the DOE Secretary should compel certain actions and one of which is to prevent curtailment of power. However, on the other side of the coin, some of the contracts have a mandated shutdown due to financial commitments. The Senator said "We see the need to satisfy their funders but it has to be synchronized with the over-all plan of DOE. Submit to us one year ahead so we can plan it and see if there is a need to delay or forward, that should be built in the contract."

During the hearing, the Third Party Auctioneer was the number one concern of the different agencies present in terms of fee and its oversight. The Senator said, despite the estimate claim of PEMC of only collecting less than 1 centavo/kwh, he wants PEMC to provide exact figures to see whether it is justifiable. He also wants to study further who should have jurisdiction over the TPA.

While the Senator believes that PCC is capable streamlining, he still believes that DOE should have jurisdiction and oversight over the TPA being the policy maker of the government. He is compelling the regulator and the policy maker to come up with a law that is not restrictive and has a framework that is flexible enough to make room for future adjustments. He believes in the interim mechanism but he doesn't see anything wrong in legislating it in the meantime.

When asked about the desire of Sec. Dominguez to privatize Agus Pulangi, the Senator said it cannot be operated that way. It has to be treated like any power plants free from government subsidies so it can compete fairly with other power plants.

In response to MERALCO'S staggered increase rate, Senator Win said ERC should be given time to study its implications. Due to the technicalities he believes the timeframe ERC needs is quite reasonable.


SEN. WIN: Well just goes to show that we need more power plants to come in. I had a discussion with power plants, gusto nila pumasok at mag invest but na tuturn off with uncertainty, bureaucracy and red tape, so the basics. Alam ko paulit -ulit but that's the bottom line and it's been hampering investments in our country so we need to solve it fast. Ang DOE meron na silang draft ng EO of projects of national significance, we are coordinating with them regarding that. They want to add more to strengthen the EO.

Q: Ano lalagay sa EO?

SEN. WIN: In some of the proposals for example yung judicial exceptions from TRO, at least TRO in the RTC level. Kung na signified as projects of national significance dapat tuloy-tuloy na yung projects. Also, I think some judicial exception with expropriations, kasi in the DOE's proposal, pati transmission line nilagay nila dun eh. For me, in the ground, nagkaka problem sa expropriations in the transmission. We need to include that in the proposal for legislation.

Q: it's now with NGCP? So they have to take that back ?

SEN. WIN: First step is to review, when I do agree with the new TRANSCO President si Atty. Matibag that we should review this. During JCPC hearing he voiced out his opinion. I do agree it needs to be reviewed. The bottomline is; we need to execute fast and as cheap as possible.

Q: Summer na is it possible ang pag lower ng demand? Baka mag persists?

SEN. WIN: From our briefings with DOE and internal assessment, as long as walang malaking planta na papalya, were quite stable for summer.

Q: Sabay sbabay ang maintenance shutdown ng mga power plants kung tutuusin dalawa lang kasi yung source outage eh, so were trying to synchronize with the July-august brownouts, it seems nagkakasabay-sabay pa rin?

SEN. WIN: This is when the planning will come in and under the law they have to submit a maintenance shutdown 1 year prior. I would like to learn more of that how they plan the shutdown. I also want to know their course of action with having in mind the schedule of the maintenance shutdowns. From what I learned nakikiusap lang ang mga previous Secretaries, but di naman pwedeng nakikiusap lang. there has to be a stronger mandate for DOE para di sabasabay ang shutdown and di tayo mawalan ng kuryetne. And it also affects the pricing, market prices, will also go up. The forecasting should be reviewed also, because if DOE needs the legislation to give it more teeth, meaning dapat wala nang pakiusap, more on reinforcement dapat para di tayo mawalan ng kuryente. Then we can propose one.

Q: What is a stronger mandate?

Legislation, although si Sec meron na eh, inherent na in the powers of the Secretary to compel certain actions. I think one of which is to prevent curtailment of power. The other side of the coin is that some of the contracts have mandated shutdown under financial commitments that we should look into. Maybe they should take that into account instead of poll of power plants, because I know they have to satisfy their funders, but it has to be synchronized with the over-all plan of DOE. Submit to us one year ahead so we can plan it and if we see if there is a need to delay forward, that should be built in the contract.

Q: What is included in the proposed legislation?

SEN. WIN: Wala pa kong legislation but the end goal here is really to give more teeth in planning. It could give more teeth to DOE in terms of preventing simultaneous shutdowns, especially big plants. Mawala lang ang isang 600 megawatts, affected na ang whole grid. At the same time, give the responsibility to the power plants in submitting their plans earlier and to coordinate earlier.

Q: Going back to the CSP, one of the question, pano fee ng Third Party Auctioneer. Yung oversight?

SEN. WIN: That was actually a good point, kanina PEMC said with no specifics that it will be below what they are collecting right now which is 1 centavo/kwh. I don't want estimates, I want exact figures so we compelled PEMC to provide exact figures. We have to study whether those figures are justifiable. At the same time valid point din yun, what if ang magkamali ang TPA? In this case, we will study whether it is DOE or ERC should have the jurisdiction over the TPA.

Q: Would PCC be coming in?

SEN. WIN: PCC para ma-streamline, I was envisioning more on DOE, in this case because the concept of CSP of being the policy of government emanates from DOE therefore they should have jurisdiction and oversight over the TPA.

Q: The premise of the legislation to institutionalize para di pinapalit palitan kung bago yung sec? it is also a question do you really need legislaition?

SEN. WIN: Since 2001 pa ang EPIRA, almost 16 years, it says there it should be competitive. CSP is not perfected yet, I mean the latest we received are broader guidelines. I compel the regulator and the policy maker to come up with a law that is not restrictive. Provide a framework for the regulator to follow and the policy maker to follow but has enough room for adjustments in the future. Like what Prof. Ravago said earlier, it should be an interim mechanism, but then again the interim mechanism has been there for 10 years, bakit interim pa rin tayo. Our COA ilan years delayed na nga, na TRO pa. I think in the meantime even though it's interim wala naman mawawala if we legislate it. But we will make sure that it is flexible enough for the regulator and the policy maker to adjust.

Q: Your thoughts on the COA and TRO? 2 sides of the coin yan.

I'll have to reserve my comments. We still need to review it carefully first. Definitely a legal question. After this ill issue a statement.

Q: You think the DOE should have the say when power plant should have a maintenance shutdown?

SEN. WIN: It is the responsibility of the DOE to make sure that we have electricity, but then again we have to give them teeth to dictate when the maintenance shutdown should happen. NGCP also should have to say since they are the operator but then again we realized si Sec. Cusi pa rin kinakausap nila. Iba yung in paper, iba yung pang practice. It will be a collective effort of the system operator and also the DOE.

Q: yung plan ni Secretary to publicize yung shutdown para makita na di sabay-sabay daw yung shutdown? Pero may concern on confidentiality. GENCO gusto NGCP yung may ayaw.

SEN. WIN: It might have an effect on the wholesale price and WESM prices pag ma-publicize. I have to study that carefully. Ang ayaw natin dito magkaroon ng info and use that information to collude. Then again we have to study the implications.

Q: Sir yung Agus mejo nagiba yung tenor ng DOF on it, gusto ni Secretary Dominguez rehab daw muna saka na lang siya i-privatize.

SEN. WIN: This is a policy question and I respect the DOF opinion's on that, personally this has both policy and political question. I respect the decision of DOF because Agus is close to the hearts of the Mindanaoans, but then it cannot be operated this way if it will remain with the government for a while. It has to be operated like any power plant. It has to compete, managed properly and it has to be independent of subsidies from the government. It has to operate just like any hydro power plant. There is still a level of support from the government which should not be the case. It is managed completely differently financially, ang nag mamanage ng plant is NPC, ang operator is PSLAM. So may disconnect na dito pa lang.

Q: JCPC is studying that, how will you harmonize?

SEN. WIN: I think the proposal of creating a new entity in the Mindanao power has some wisdom, let's create a new entity. It's a GOCC, it should be managed properly it should be a stand-alone company. No subsidies, so it can compete fairly with other power plants.

Q: MERALCO di pa rin na approve yung staggered rate increase?

SEN. WIN: That should be studied carefully, let's give ERC some time to study that, it is their responsibility. Kaya di ko na sila pinipilit kanina. ERC plays such a crucial role and alam naman natin how technical this is, so justifiable naman yung time na hinihingi nila.

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