Rehab of Agus, Pulangi hydropower plants a go with or without privatization

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An aerial view of a hydropower plant along Agus River, near scenic Maria Cristina Falls in Iligan City in this photo taken on March 4, 2014. MindaNews file photo

DAVAO CITY (MindaNews/03 October) – The rehabilitation of the Agus and Pulangi hydropower complexes will push through with or without privatization, Energy Undersecretary Felix William B. Fuentebella said.

In a press conference during the Energy Investment Forum and Stakeholders Conference at the Grand Regal Hotel Tuesday, Fuentebella said the two hydropower plants de-rated capacity is 686 megawatts. Their installed capacity is 982 MW.

He said Finance Secretary Carlos G. Dominguez III, chair of the Power Assets Liabilities and Management Corporation (PSALM), has directed to push through with the rehabilitation.

He said Dominguez pointed out that now is the best time carry it out as Mindanao is experiencing an excess in power supply.

“The best time for the rehabilitation of Agus-Pulangi Power System is when you have a scenario wherein you are not so much dependent on them. Whether you privatize it or not, it’s good to conduct the rehabilitation,” he said.

No definite schedule has been given, but the International Financing Corporation, a member of the World Bank Group, and companies from Japan and Norway have expressed interest to assist government in rehabilitating the plants, he said.

Fuentebella added that the Mindanao Power Corporation bill authored by Zamboanga City Rep. Celso Lobregat has been approved by the House Committee on government enterprise and privatization chaired by North Cotabato Rep Jesus Nonato Sacdalan.

But the undersecretary said he doesn’t know when the bill will be brought to the plenary.

If it becomes a law, the proposed government-owned power corporation will manage and operate all state-owned power assets of the government.

The bill was the response of Mindanao lawmakers to the plan to privatize the Agus and Pulangi hydropower complexes under the previous administration but it was not passed during the 16th Congress.

The Agus and Pulangi hydropower complexes have seven plants – Agus 1, Agus 2, Agus 4, Agus 5, Agus 6, Agus 7, and Pulangi 4.

The Electric Power Industry Reform Act excluded Agus-Pulangi from privatization for 10 years from the time it was enacted in 2001. The PSALM then scheduled their privatization to 2017.

WESM-Mindanao full operation next year

Energy Assistant Secretary Redentor Delola said the Wholesale Electricity Spot Market-Mindanao (WESM) has a “very high reception” among the electric cooperatives participating in the ongoing trial operations since June 26, 2017.

He said they expect full market operation for WESM-Mindanao by second quarter of 2018.

“We do not have problems in the implementation side,” he said.

He said they need to complete the tests and finish the price determination methodology that has yet to be approved by the Energy Regulatory Commission by February 2018.

The methodology sets the guidelines on how prices in the market will be computed, he said.

He said Mindanao has an installed capacity of 3,141 MW, but only 2,097 MW is available at present, which is still higher compared to the average demand of 1,707 MW.

The Philippine Electricity Market Corporation handled the Interim Mindanao Electricity Market before it was suspended in February 2014 due to “system collapse in Mindanao” and the need to “resolve operational and commercial issues and concerns.”

Fuentebella said WESM-Mindanao is a much faster way to trade power because there is a bidding every five minutes that allows for the trading of electricity, which prioritizes the cheapest mix of renewable and non-renewable energy.

He said WESM-Mindanao is also necessary to address the oversupply of power in Mindanao since it can be dispatched to areas where there is power lack.

He said they hope the National Grid Corporation of the Philippines (NGCP) will complete the Visayas-Mindanao Interconnection Project by December 2020.

According to NGCP’s hydrographic survey conducted from September to November 2016, a found the route along the country’s western seaboard – from Cebu to Dipolog – viable for the implementation of the plans of interconnecting the Visayas and Mindanao grids.

The Luzon and Visayas grids have long been connected via NGCP’s Naga–Ormoc High Voltage Direct Current line.

New power plants

Delola said there is an ongoing construction of more power projects in Mindanao with a combined capacity of 1,289 megawatts.

He said they need to continue encouraging power investors to consider coming to Mindanao despite the excess in power supply, as the demand in the island is growing at a rate faster than Luzon’s and Visayas’.

Aside from these ongoing power projects, he said DOE reported some 2,500 MW of indicative investments that they hope to see taking shape within 10 years.

He said the new power projects entering Mindanao are 50% renewable energy, 48% coal and 2% oil.

He acknowledged that making renewable energy as the “baseload”, the power plants that can run 24/7, would come with numerous challenges because of its vulnerability to weather changes.

He said the renewable energy power plants in Mindanao are operated as “mid-merit plants” deployed in support to the baseload power plants during daytime. (Antonio L. Colina IV/MindaNews)

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