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The Wholesale Electricity Spot Market (WESM) has received much flak
lately with accusations of price manipulations among players.
However, in Ilocos Norte, electricity consumers are benefiting from
the operation of WESM. The Ilocos Norte Electric Cooperative (INEC)
is likely to lower its rates soon due to savings resulting from
buying electricity on the spot market.
INEC, however, cannot buy its entire requirement
in the spot market. The electric cooperative has an electricity
sales agreement with Northwind Power Development Corporation.
Northwind’s wind turbines generate a maximum of 24.75 MW. INEC
takes it all as per their contract, even if the spot market offers
rates lower than the Northwind rate (which is pegged against the
Napocor rate but with a 5 percent to 7 percent discount). Northwind
supplies about 40 percent of INEC’s demand. The spot market rate
is usually lower than Northwind’s, depending on the time of day
and the supply and demand situation in the entire market. During my
recent visit to Ilocos Norte, Northwind was not generating power due
to weak wind during summer.
Northwind-generated power may not be the
cheapest but it is the cleanest. There are no environmental and
health costs to the community. The wind farm is the country’s
first carbon credit program. While Northwind officials during the
May 2 briefing of Energy Secretary Angelo Reyes evaded his question
as to how much money the wind farm is making and only admitted so
much that debt payments are made on time, I learned that the company
is collecting millions of dollars through the carbon credit program.
The rate that INEC is paying for the electricity is based on the
Napocor rate and not on actual cost structure.
It took Northwind three long years to secure the
necessary permits to set up the wind farm. Northwind asked Secretary
Reyes to help push for the passage of the Renewables Bill. The bill
will cut much of the red tape and facilitate the entry of clean and
renewable energy. More wind power projects are in the pipeline in
Ilocos Norte.
The spot market hasn’t been launched in the
Visayas yet. Lack of power supply has been blamed for the delay.
Yes, supply is critical and shortage within the Cebu-Negros-Panay
grid is imminent. Additional supply will be available in 2010 with
the completion of a coal-fired power plant in Toledo City, Cebu.
Carmen Copper Corporation will reportedly need 50 MW to operate the
Atlas Mine. Initially, only 5 MW was available, but persistent and
diligent scouting for power enabled the company to eventually source
40 MW. The fate of the much talked about KEPCO coal-fired power
plant in Cebu remains uncertain. The earliest the plant would be
completed is 2011—if it will be constructed at all. In the
meantime, construction of two coal-fired power plants might soon
start in Panay.
Panay is experiencing daily power interruptions.
Napocor’s solution is to rent 30 1-MW generator sets. Each of the
two batches of 15 generator sets will reportedly be rented at P200
million each. Yet, Napocor is operating Dingle 1 and 3 in Panay.
Combined, this bunker-fueled facility could generate 160 MW. Right
now it is generating 40 MW only.
Yes, it needs to be rehabilitated. Repair and
rehabilitation however is estimated to cost less than P500 million.
Some of the engines that need repair could be operational within
three months. Spare parts were reportedly ordered late last year and
were expected to be delivered in January or February. In other
words, more engines could have been operational at this time. Dingle
1 and 3 run on bunker fuel which is cheaper than the diesel on which
the soon-to-be-leased generator sets run. Panay ’s electricity
consumers won’t feel the difference, as the bill will be footed by
the government, that is, the taxpayers. Dingle is scheduled to be
privatized. Repair work financed by Napocor will enable the
government to ask a higher price for the plants. Compare this to
leasing privately owned generator sets.
Oil prices are soaring to all time high levels
in the world market. Are electricity rates in our country
unreasonably high? If they are why is that so? Is it because we have
the wrong mix of energy sources? Or are unscrupulous entities and
individuals taking advantage of electricity consumers? If power
rates are high, how come that Napocor is losing millions selling
electricity at rates below the cost of production? So many
questions.
opinion@manilatimes.net
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