Cheap power in Mindanao coming to an end

GENERAL SANTOS CITY (MindaNews/04 December) — For the longest time, Mindanao enjoyed the benefit of cheap electricity generated by the hydroelectric plants of the Agus river system and the Pulangi River.

Even with the commissioning of the 210-megawatt coal-fired STEAG power plant in Misamis Oriental in 2006, hydroelectric power still accounted for more than half of the island’s power supply (53 per cent) which allowed consumers to enjoy cheap electricity compared to residents of Luzon and Visayas.

However, as early as 2007 industry sources, as well as power producers, have been warning that an imminent power crisis was looming in the horizon with available capacities no longer able to meet the demand for power supply by 2014.

Back then, reserve capacity was fast drying up and they warned that by the end of this year, 2011, reserve capacity will no longer be available.

In 2009, the Philippine Chamber of Commerce and Industry said Mindanao will need an annual additional capacity of 100 megawatts if it is to cope up with increase demand which was estimated to be growing at an annual rate of three to four percent.

Then, the rated capacity of all existing power plants was at 1,850 megawatts but actual available capacity was only at 1,520 megawatts.

But in 2010, the projected shortfall in power supply was already severely felt throughout the island when a prolonged dry season brought the water level in Lake Lanao several centimeters below the critical level.

Power supply took a tailspin in March last year with available capacity in the island going down to as low as 750 megawatts or a shortfall of up to 550MW under the 1,300MW peak demand. Power interruptions as long as twelve hours in some parts of the island became daily occurrences prior to the May 10, 2010 elections.

Some viewed the critical power supply situation as a political issue.

But as 2011 is about to come to an end, everybody now is of the belief that the Mindanao power situation has reached critical level that unless new power stations are built within the next three or four years, the economy of the island could suffer some serious blow.

With the National Power Corporation no longer allowed to generate new capacities following the enactment of the Electric Power Industry Reform Act Of 2001 (R.A. 9136), the state-owned company has been cutting power supply to distribution utilities.

When the Western Mindanao Power Corporation and the Southern Philippines Power Corporation (100 megawatt of combined capacity) are turned over to the Alcantaras, who currently operate the two diesel-powered plants, in 20116-21017 respectively, its generating capacities would be reduced further to effectively less than 1000 megawatts.

Napocor earlier sold its two diesel-fired power barges to Therma Marine Inc, an affiliate of the Aboitiz Power Group.  The two power barges have a combined capacity of 210 megawatts.

At least three thermal power plant projects are now in the pipeline with the 200-megawatt power plant of Sarangani Energy Corporation, owned by the Alcantaras, likely to commence construction early in 2012.  The Alcantaras are also planning to build another 100-megawatt power station in Zamboanga City while the Aboitizes are now seeking government clearance to build a 300-megawatt power plant in Toril, Davao City.

All three projects are coal-fired power plants and are not expected to go on commercial stream at least until the end of 2014.

By then however, the power demand and supply problem is likely to get worse.

As a matter of fact, Therma Marine Inc. announced last week that it is bringing one of its power barges from Luzon in anticipation to another supply shortfall next year.

Distribution utilities are now hard pressed to cover up for the reduction of power supply from Napocor by sourcing their power needs elsewhere.  The South Cotabato II Electric Cooperative, for one, has entered into a supply contract with Therma Marine Inc. for an 18-megawatt supply of electricity after Napocor reduced supply by 30 megawatts.

Socoteco II will likely resort to scheduling rotating brownouts in the areas covered by its franchise (General Santos City, Sarangani, and the towns of Polomolok and Tupi in South Cotabato) starting next year.

Once all the power plants of the Aboitizes and the Alcantaras start generating electricity in 2016, however, the generation mix in Mindanao will tilt towards thermal energy.

The days of hydroelectric source as base load capacities could be over and this will likely also put an end to cheap power supply, too.

Power rates will however depend on where thermal energy sources are located and from where distribution utilities will source their power needs.  Whichever and wherever the supply and demand curve dictates on the matter of the cost of power, Mindanao residents should now brace for the reality that the regime of cheap power supply is coming to an end. (Edwin G. Espejo/MindaNews)