DOE unsure about using Malampaya fund for ILP

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The Department of Energy (DOE) on Friday expressed apprehensions
about using the Malampaya fund to subsidize the Interruptible Load Program (ILP), one of the measures the government is eyeing to avert an expected power shortage next year.

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Energy Secretary Carlos Jericho Petilla said the Malampaya fund could only be tapped to subsidize the ILP if this is mandated by Congress through Joint Resolution 21, which seesk to give President Benigno Aquino 3rd special powers to address the looming power shortage.

But even if Congress were to authorize the use of the Malampaya fund for the ILP, he said it would still be vulnerable to a legal challenge.

The Malampaya fund comprises the royalties from the Malampaya natural gas fields off Palawan.

“I’m open to it, but unless it is stated in the resolution, then it will be subject to challenge in the interpretation of Presidential Decree 910,” Petilla told The Manila Times.

Presidential Decree 910 created the Malampaya Special Fund to finance energy resource development and exploitation programs and projects of the government and “for such other purposes as may be hereafter directed by the President.”

The House Energy Committee on Tuesday approved Joint Resolution 21. The measure is scheduled to be submitted to the plenary next week for second reading.

The joint resolution mandates the establishment of additional generating capacity through the ILP, a mechanism intended to mitigate the looming power shortage next summer.

Under the program, companies enrolled in the ILP will run their own generator sets (gensets) when the National Grid Corporation of the Philippines expects electricity supply to fall short of demand.

The government will reimburse the ILP participants for voluntarily deloading from the grid and using their gensets.

Petilla estimates that P450 million will be needed to fully subsidize the use of gensets by private companies enrolled in the ILP, although the actual amount may be higher or lower depending on the severity of outages in the Luzon grid next year.

He said ILP participants will be reimbursed for the cost of fuel, operations and maintenance for running their gensets.

The energy chief based the amount on a formula drawn up by the Energy Regulatory Commission (ERC) and data on forced outages in 2014.

But he noted that the joint resolution does not stipulate how the ILP will be funded.

Because of this, Petilla said they still have to discuss with the Department of Budget and Management where to source the funds for the ILP.

He also said that it is likely that the DOE or the Transmission Commission (Transco) will handle the reimbursement for the ILP participants.

The DOE expects to make available some 800 megawatts of power from the ILP to address a projected 1,004 MW shortage next year.

But the DOE earlier clarified that the ILP will only be part of the answer to the looming energy shortage and does not guarantee zero brownouts.

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