DMCI power generation arm bags contract to build, operate diesel plant in Mindoro
By: Euan Paulo C. Añonuevo, InterAksyon.comJuly 2, 2013 3:39 PM
In a disclosure to the Philippine Stock Exchange, DMCI said the company’s subsidiary, DMCI Power Corp, bagged the contract for the “construction, operation and maintenance” of a 15-megawatt bunker-fired diesel plant in Calapan, Oriental Mindoro.
DMCI Power emerged as the lone qualified bidder held by Oriental Mindoro Electric Cooperative Inc (ORMECO) last June 28.
Two other bidders — Sta. Clara Power Corp and Mindoro Grid Corp — were disqualified for deficiencies in their respective bid documentary submissions.
Despite this, Ormeco opened the second envelope containing the commercial bid form of DMCI Power.
The award of the power project and the corresponding electricity supply contract will commence after Ormeco completes the postâqualification evaluation.
Ormeco’s power supply is served by its mini-hydro plant, National Power Corp’s (Napocor) Small Power Utilities Group (SPUG), and Global Business Power Corp of the Metrobank Group.
Isidro A. Consunji, DMCI president, said the company is interested in putting up power plants in islands and far-flung areas that SPUG serves.
SPUG supplies power to locations not connected to the main grid using diesel-fired generating sets.
Consumers in the main grid subsidize SPUG’s operations because of the high cost of running such power facilities in such small markets.
Among the SPUG areas that Semirara is eyeing are Palawan (30 megawatts), Masbate (15 megawatts) and Mindoro (30 megawatts).
ERC issues the Net-metering Rules
07/03/2013
In a Resolution promulgated on July 1, 2013, the Energy Regulatory Commission (ERC) adopted the Rules Enabling the Net-metering Program for Renewable Energy, including the Net-metering Interconnection Standards (Net-metering Rules). The Net-metering Rules allow electricity end-users who are updated in the payment of their electric bills to their distribution utility (DU) to engage in distributed generation. They can generate electricity from renewable energy (RE) sources like solar, wind, biomass or such other RE Systems not exceeding 100 kW that can be installed within the end-users’ premises and supply the electricity they generate in excess of what they can consume directly to their DU.
In a net-metering arrangement, the end-user maintains a two-way connection to the distribution system and is only charged or credited, as the case may be, for the difference between the electricity supplied by the DU (import energy) and the electricity it supplies to the DU during times when it has excess RE generation (export energy), both of which are metered using 2 uni-directional meters, one for import and one for export, or a single bi-directional meter. Under the Net-metering Rules, pending the development of a different pricing methodology, the net-metering customer’s export energy shall be priced based on its DU’s blended generation cost. Included in the Net-metering Rules also are the standards, which shall be complied with and observed by the net-metering customer to address engineering, electric system reliability, and safety concerns for net-metering interconnections, such as those concerning voltage level, frequency, and power quality, and those relating to system protection.
Section 10 of Republic Act No. 9513 or the Renewable Energy Act mandates the ERC, in consultation with the National Renewable Energy Board (NREB), to establish the net-metering interconnection standards and pricing methodology to usher in the implementation of the net-metering for renewable energy program. NREB developed the draft net-metering rules, which after being subjected to public consultations and after a series of coordination meetings and workshops between the ERC and the NREB Technical Working Groups and the relevant stakeholders, was adopted and approved by the ERC.
“The net-metering program will definitely change the electricity landscape. From just being recipients of electricity, electricity users may also now become generators, supplying not only their electricity requirements but also that of others through their distribution utilities’ system. They avoid drawing electricity from the distribution grid equivalent to their own RE generation that they consume, in the process realizing savings in their electricity bills, and get paid a reasonable price for their RE generation that they cannot any more consume. It is a win-win, for the electricity end-user and, more importantly, for the environment because of the additional RE capacity that is shored up by the program,”ERC Chairperson and CEO Zenaida G. Cruz-Ducut explained.
Resolution No. 9, Series of 2013, Rules Enabling Net Metering Program for Renewable Energy
http://www.erc.gov.ph/PressRelease/ViewPressRelease/ERC-issues-the-Net-metering-Rules
Coal power firm borrows P7B
Lenders were BDO Unibank Inc., Security Bank Corp., and Rizal Commercial Banking Corp.
“Proceeds of the loan will be used to fund the expansion of SLTEC’s power plant currently under construction,” Trans-Asia said.
SLTEC is currently in the construction stage of the first 135-megawatt (MW) unit of the Batangas coal facility.
The first unit is expected to become operational by the middle of next year.
The expansion, meanwhile, will entail the construction of a second 135-MW unit to increase the power plant’s total capacity to 270 MW.
“This project is the second phase of expansion of SLTEC’s Calaca thermal power plant,” Ayala Corp. said.
According to Ayala, the SLTEC unit 2 is expected to be completed by 2016.
SLTEC reported that the estimated total cost of the second unit is P10 billion.
Trans-Asia president Francisco Viray earlier said that 30 percent or P3 billion of the total project cost for the second unit will be shared equally by Trans-Asia and AC Energy.
The remaining 70 percent or P7 billion,, meanwhile, will be borrowed from banks.
http://www.malaya.com.ph/index.php/business/business-news/35009-coal-power-firm-borrows-p7b
Phinma-Ayala joint venture to secure P7-B loan
Energy firm to fund expansion of coal facility in Batangas
By Riza T. Olchondra
Philippine Daily Inquirer
Trans-Asia Oil and Energy Development Corp. of the Phinma group on Tuesday reported that its joint venture company with AC Energy Holdings Inc. is set to secure a P7-billion loan from a group of local banks to fund the expansion of a 135-megawatt (MW) coal power plant in Batangas province.
South Luzon Thermal Energy Corp. (SLTEC), a joint venture of Trans-Asia and the Ayala group’s AC Energy Holdings, already signed a loan contract last Monday with Banco de Oro Unibank Inc., Security Bank Corp. and Rizal Commercial Banking Corp.
“Proceeds of the loan will be used to fund the expansion of SLTEC’s power plant currently under construction in Calaca, Batangas, increasing the plant’s capacity from 135 MW to 270 MW,” Trans-Asia assistant corporate secretary Alan T. Ascalon said in a disclosure to the Philippines Stock Exchange.
In March, Trans-Asia said it would invest P1.5 billion in SLTEC to support an expansion program that would increase the parent company’s power generation portfolio.
AC Energy Holdings of the Ayala group will infuse the same amount in the joint venture.
The estimated total cost of the project is P10 billion, Trans-Asia officials earlier said.
The second 135-MW coal-fired fluidized bed will be constructed next to the first unit. SLTEC unit 2 is expected to be fully operational by 2016.
Earlier this year, SLTEC signed up D.M. Consunji Inc. for an engineering procurement contract. DMCI Holdings Inc. said that its construction arm, D.M. Consunji and China National Technical Import and Export Corp., will put up SLTEC 2 on a turnkey basis.
Trans-Asia and AC Energy entered into a a joint venture agreement in 2011 to develop and operate the Batangas thermal power plant.
Since 2007, Trans-Asia has been actively trading electricity in the Wholesale Electricity Spot Market and has continuously expanded its supply portfolio and customer base.
“Having anticipated retail competition and open access early on, Trans-Asia is set to provide custom electricity services to distribution utilities and qualified end-users,” the Phinma group said on its website.
Apart from power generation and supply, Trans-Asia also engages in oil and gas exploration. It is a minority partner in Supply Contract (SC) 6, SC 14, SC 51, SC 55 and SC 69. It also holds an option to acquire participating interest in SC 52.
http://business.inquirer.net/130107/phinma-ayala-joint-venture-to-secure-p7-b-loan
Geothermal output to rise 75% by 2030
By Alena Mae S. Flores | Posted on Jul. 03, 2013 at 12:01am | 497 views
Renewable Energy Management Bureau director Mario Marasigan said in a forum the additional geothermal capacity target represented a 75-percent increase to the current installed capacity of 1,848 MW.Visayas currently has the highest installed capacity with 915 MW. Luzon has 824 MW while Mindanao has 108 MW of geothermal energy.
Marasigan said the bulk of the new capacity, or 1,160 MW, is expected to be added between 2015 and 2020, with the additional geothermal installation target entailing investments of around P261 billion.
New geothermal areas will account for 930 MW between 2015 and 2020, while the expansion of existing fields is expected to contribute 230 MW.
Marasigan expects the installation of 50 MW of additional capacity from 2013 to 2015 with investments of P11.25 billion.
Committed geothermal projects to date include the 20-MW Maibarara in 2013 and the 30-MW Nasulo in 2014.
The department aims to add 155 MW from 2020 to 2025 with projected investments of P34.875 billion and 80 MW from 2025 to 2030 worth P18 billion.
Marasigan said geothermal energy was staging a comeback with new fields being developed and existing areas gearing up for expansion.
Energy Secretary Carlos Jericho Petilla stressed the need for a robust and diverse power supply mix.
He said while the country’s electricity supply is dominated by coal-fired power projects because of the relatively low price of the fuel and the comparatively shorter time to put up such plants, renewable energy sources such as wind, solar, hydro and geothermal are still viable supply sources.
Petilla said the department does not favor any particular type of fuel or source but the government wants to ensure a sustained and balanced power supply.
Petilla said the government was focused on solving the short-term power supply problem in Mindanao. The island is poised to obtain around 1,000 MW of new supply from 2015 to 2016 with the completion of several new power projects in Davao and Sarangani.
Petilla said he “foresees more renewable energy projects to come on-stream next.”
Philippine Geothermal Production Company Inc. president Tony Yee, meanwhile, said his company was encouraged by the enthusiasm from the department and the support it gives to developers and investors.
http://manilastandardtoday.com/2013/07/03/geothermal-output-to-rise-75-by-2030/
Tariff scheme for EC guarantees pushed
A tariff mechanism via pass-on rate to electricity consumers is being proposed so the country’s electric cooperatives can address cash flow dilemmas on their security deposits for supply agreements or prudential requirements with the Wholesale Electricity Spot Market.
The estimated pass-on impact of such guarantees will be P0.20 per kilowatt hour (kWh) into the bills of the EC’s customers.
It was further proposed that “the charge for payment guarantees shall appear as a separate line item in the EC’s monthly bill to its member-consumers.”
The other key requirement for ECs will be a security deposit that they must post with the National Grid Corporation of the Philippines (NGCP) upon sealing transmission service agreement (TSA) with the system operator.
This has been based on the petition of the Philippine Rural Electric Cooperatives Association, Inc. (Philreca); wherein it sought that rules be laid down for “the collection from consumers of the cost of payment guarantees for the power supply contracts and transmission service agreements entered into by the ECs.”
The application will be subject to public hearings in various areas nationwide – starting this August 20 until October 15 this year.
It has been emphasized that “the purpose of the prudential requirements is to ensure the effective operation of the spot market by providing a level of comfort that the WESM members will be able to meet their respective obligations for the payments as required under the WESM Rules.”
To date, around 26 ECs from Luzon and 22 from Visayas are direct trading participants at the electricity spot market. About 35 of them posted cash bond; while 13 others submitted irrevocable standby letters of credit (SLC) as prudential guarantees.
It must be recalled that power generators are complaining about the non-compliance of WESM-participating ECs on prudential requirements – hence, negating a buffer fund that could have been the recourse of power suppliers if the ECs cannot settle their financial obligations on time.
Philreca stressed that “the existing tariff of the ECs does not provide for surplus funds by way of or in the form of a return on rate base and depreciation,” hence, they cannot correspondingly allot additional cash for their prudential requirements.
The EC group added that “the cost and expenses (relating to security deposits) are not incorporated in the existing tariff”, thus, it is batting for “an urgent need to adopt and implement a tariff mechanism to sustain the ECs’ operational efficiency and financial viability.”
http://mb.com.ph/Business/Energy/20196/Tariff_scheme_for_EC_guarantees_pushed#.UdPpbTs_sYM
Chevron eyes more Geothermal projects
American firm Chevron, via its Filipinized corporate vehicle Philippine Geothermal Production Company, Inc. (PGPC) which is majority owned by the Sy Group, has indicated further investments in geothermal resource exploration and developments in the country.
In a statement to the media, PGPC president Antonio Yee noted that their company is encouraged to inject fresh investments following the issuance of their new service contracts (SCs) by the Department of Energy (DOE).
“With the fresh service contracts, we renew our commitment to deliver clean geothermal energy and strengthen our position to enhance the value of Tiwi and MakBan (Makiling-Banahaw) by implementing resource development projects over the next years.”
PGPC has not given specific investment figures it will have for Tiwi-MakBan. The company is supplying the steam requirements for the electricity generation of the two plants owned by the Aboitiz Group.
Yee added that the “DOE executed the geothermal service contracts on April 25, 2013 for the Tiwi geothermal field in the province of Albay, and MakBan geothermal field in the provinces of Batangas and Laguna.”
Effectively, the service contracts granted PGPC “the exclusive right to operate these fields for 25 years, renewable for another 15 years.”
This early though, legal questions are being raised on the widely-perceived hasty decision of the DOE to grant PGPC’s service contract, as such may have violated the provisions of the Philippine Constitution, primarily the maximum 50-year term for service contracts. Energy Secretary Carlos Jericho Petilla himself told media that he will have the “geothermal service contract reviewed” by the DOE’s legal team.
On record, PGPC’s precursor company Chevron Geothermal Philippines Holdings Inc. (which was formerly Philippine Geothermal Inc.), has already been operating the Tiwi and MakBan steamfield assets since September 1971 or about 42 years.
That was on the strength of a service contract it had with National Power Corporation (NPC), which was subsequently transferred to the Power Sector Assets and Liabilities Management Corporation.
Legal opinions rendered by previous leadership at the DOE indicated that if the spirit and letters of the Philippine Constitution will be strictly applied, the remaining term for PGPC (which is the offshoot Filipino company of Chevron Geothermal) may only be confined to several years – or around eight (8) years if 2013 is used as reference, instead of the additional 40 years under the GSC.
PGPC emphasized that it has been leaning on the “promise of support” sounded off by the energy secretary, in regard to “the permits and approvals for crucial power projects and assisting them in gaining social acceptability.” Petilla, at the 10th general assembly of the National Geothermal Association of the Philippines (NGAP), noted that “the DOE is looking at setting up a bureau or an office that will concentrate on local government unit (LGU) permits and social concerns.” (MMV)
http://mb.com.ph/Business/Energy/20374/Chevron_eyes_more_Geothermal_projects#.UdPpbjs_sYM
7 REs certified for FIT availments
At least seven renewable energy projects across various technologies have now been issued with certificate of commerciality (COCs) and lined up by the Department of Energy (DOE) for availment of feed-in-tariffs.
Based on documents from the energy department, the total installations placed under the FIT system already hovered at 316.5 megawatts – roughly half the approved ceiling of 750MW that shall be set for commissioning within the 2015 timeframe.
It is now apparent that the approved FIT-qualified installations for wind technology have been oversubscribed, with total capacity of the projects now reaching 258.5MW. The approved capacity cap for wind is at 200MW.
The wind projects bestowed with commerciality declaration include the 87-MW facility of Energy Development Corporation; 67.5-MW Pilillia project of Alternegy Wind One Corporation; 50MW Nabas-Buruanga project of PetroGreen Energy Corporation; and 54-MW proposed San Lorenzo wind facility of Trans-Asia Renewable Energy Corporation.
The ‘oversubscription’ in megawatt capacities is making the race for the wind power projects’ commissioning more exciting – with two of the project sponsors declaring late 2014 as their commercial operations target.
For solar, there is only one project certified for FIT availment to date. It is the 30-MW solar farm facility in Leyte proposed by a local developer.
On the other, two hydro projects have been accommodated into the FIT system at this point. These are the 18MW Timbaban hydroelectric power project in Aklan; and the 10-MW Culaman hydro project in Bukidnon which were both proposed by Oriental Energy and Power Generation Corporation.
There are biomass projects which also applied for FIT availments, but there was no one granted with COC yet, as culled from the latest roll of the DOE.
The COC-underpinned project developments are still marginal compared to the installed capacity target of 2,334.54MW for RE awarded service contracts.
Of the total 339 RE projects awarded by the energy department, the estimated potential capacity could reach as high as 5,724MW.
Roughly 250 projects are still pending for the department’s approval and these could yield potential capacity of 3,073 megawatts.
DOE director Mario Marasigan earlier told reporters that they will be “cleaning up” the RE projects’ application list within the year – with some proposals possibly getting dumped.
http://mb.com.ph/Business/Energy/19991/7_REs_certified_for_FIT_availments#.UdPssjs_sYM
DOE secures P3.25-B budget
The Department of Energy (DOE) was granted P3.254 billion budget this year, with the biggest chunk going to the foreign-assisted electric tricycle (e-trike) project, documents showed.
Broken down, the budget allocations cover P284.76 million for personnel services; P466.93 million for maintenance and other operating expenses (MOOE); and P2.503 billion for capital outlays.
The e-trike project accounted for the bulk of the budget with P2.580 billion. The high importance given to this undertaking is evident because the Aquino administration wants to make “the electrification of the transport sector” among its flagship programs.
The approved DOE budget also set special provisions for the country’s “sitio” electrification program.
Documents showed that P3.6 million and P126.77 million, respectively, will be charged against the DOE special account for the household electrification program in off-grid areas to be supported by the deployment of renewable energy (RE) systems.
Another big-ticket ‘special provision’ item is the P779.258 million intended to “finance energy resource development and exploitation.”
For the operations of the department’s bureaus and field offices, the National Renewable Energy Board (NREB) cornered the smallest allocation of P5.199 million; while that on renewable energy exploration, development and utilization got a heftier share of P77.675 million.
Comparatively, the allocation for the operational requirements of the National Biofuels Board (NBB) is higher at P17.627 million or three times bigger than the NREB allotment.
The bias of Energy Secretary Carlos Jericho Petilla as to the proposed improvements of the department’s information technology system is also manifest with the IT and data management services department getting a fairly bigger budget of P66.884 million.
For field offices, Luzon has the smallest share at P10.204 million; while Visayas got the highest budget at P20.727 million. Mindanao’s appropriation is slightly lower at P20.117 million.
The department’s legal services unit was granted a budget of P12.023 million; energy policy and planning got P49.582 million; while the energy research testing and laboratory services unit was given P33.478 million.
http://mb.com.ph/Business/Energy/19988/DOE_secures_P3.25-B_budget#.UdPssTs_sYM
PSALM defers Universal charge filing
With its financial stature being under the glare of media lenses and public scrutiny, the Power Sector Assets and Liabilities Management Corporation (PSALM) has opted to defer its filing for new universal charges (UC) until its figures would have been validated by the Commission on Audit.
“PSALM has requested for extension of filing in order to complete documentation requirements as some will have to be secured outside of PSALM,” company president Emmanuel R. Ledesma Jr. has noted.
He added that the requirement will include “the certification of variance analysis reports from (an) independent third party,” which Ledesma noted to be the COA.
The liability-ridden firm was supposed to file last month its new application for universal charges covering stranded debts (SD) and stranded contract costs (SCC) that it will pass on to all electricity ratepayers, but it pushed back from it for the meantime.
Some industry stakeholders opined though that Ledesma may have been avoiding public backlash at this point when various attached agencies and corporate entities of the Department of Energy (DOE) are undergoing restructuring.
In the last ruling rendered by the Energy Regulatory Commission (ERC), the company was just given go-signal to pass on P53.58 billion worth of stranded contract costs under the UC line item for an equivalent of P0.1938 per kilowatt hour.
Its P65-billion bid for stranded debts recovery was junked by the power industry regulator; hence, the UC collections penciled in by the company may just reach P11 billion annually over four years instead of the targeted P20 billion.
PSALM has been justifying that cost recovery for its stranded liabilities are allowed under the Electric Power Industry Reform Act; as these formed part of the costs utilized in putting up power projects.
To cushion any portended “heavy impact on consumers’ pockets,” the company went as far as asking Congress to have its corporate life extended by additional 10 years or until 2036.
Based on its calculations, if its UC cost recoveries will be stretched, the pass on rate may be softened to P0.1426 per kWh.
It indicated that within that level of UC, the company may rake in additional revenues to the tune of: P9.6 billion this 2013; P9.9 billion (2014); P10.3 billion (2015); P10.7 billion (2016); P11.1 billion (2017); P11.5 billion (2018); P11.9 billion (2019); P12.5 billion (2020); P13.2 billion (2021); P13.9 billion (2022); P14.6 billion (2023); P15.4 billion (2024); P16.2 billion (2025); and P17.1 billion (2026-2036).
If the UC will not be levelized, PSALM estimated that its required cost recoveries for 2013 alone may reach P0.2551 per kWh.
Onward, the UC pass-on will be P0.2145 per kWh in 2014; P0.3137 per kWh in 2015; P0.4669 per kWh in 2016; P0.2996 per kWh in 2017; P0.1642 per kWh in 2018; P0.4899 per kWh in 2019; P0.1819 per kWh in 2020; and P0.0926 in 2024.
http://mb.com.ph/Business/Energy/20200/PSALM_defers_Universal_charge_filing
Ayala, Phinma joint venture takes out P7 billion loan to finance Calaca power plant expansion
By: Krista Angela M. Montealegre, InterAksyon.com
July 2, 2013 12:27 PM
In a disclosure to the Philippine Stock Exchange, AC said South Luzon Thermal Energy Corp (SLTEC) signed on Monday a P7-billion project loan facility with BDO Unibank Inc, Security Bank Corp and Rizal Commercial Banking Corp.
SLTEC is the joint venture company of Ayala unit AC Energy Holdings Inc and Trans-Asia of the Phinma group.
The debt will fund the construction and operation of a 135-megawatt circulating fluidized bed power plant in Calaca, the second phase of expansion of the facility. It will be operational by 2016.
151 Meralco customers sign up for open access
Majority of the qualified contestable customers (CCs) within the franchise area of Manila Electric Company (Meralco) are still apparently overwhelmed by direct power supply contracting jitters that only 151 signed up as prospective participants under the retail competition and open access (RCOA).
Based on the utility firm’s validation, about 700 of its customers are “potential contestable customers under open access,” thus, the 151 RCOA registrants with its local retail electricity supplier (RES) unit would considerably be marginal.
The Philippine Electricity Market Corporation (PEMC) noted during the commercial kick-off of RCOA last week that only 239 CCs have enlisted compared to the more than 900 which were earlier pre-qualified as RCOA participants.
The PEMC, being the operator of the Wholesale Electricity Spot Market (WSESM), is the designated central registration body (CRB) for open access participants.
So far, according to the industry stakeholders, about 30-percent of the expected participants joined the RCOA, which is not really a bad number considering the tricky concerns still being resolved under open access policy.
ERC Commissioner Alfredo J. Non is most forthright in his assessment of the RCOA’s implementation, noting that “like any activity, there is always a learning curve. The RCOA is new to all of us. And even the other countries that have implemented it, did not escape this initial adjustment process.”
The listed 151 RCOA participants that enlisted with Meralco RES could infer then “that these CCs have still chosen to stay with the service of the DU which had been supplying them prior to the kick-off of open access in the industry.”
Several others opted to enter into power supply contracts with affiliates, such as in the case of San Miguel Brewery, Inc., which entered into a deal with power generator affiliate San Miguel Energy Corporation.
A number of CCs though seem to have moved notches ahead in securing their power directly from electricity suppliers.
In particular, TeaM Energy Philippines cornered seven customers for a supply deal; while Masinloc Power Partners Co. Ltd. listed one customer.
DirectPower Services, Inc. which is affiliated with Ayala Land, Inc. also enlisted 29 customers; and the two retail electricity supplier-firms of the Aboitiz Group are as enthusiastic into bringing the restructured power industry’s open access regime to fruition.
Its Aboitiz Energy Solutions, Inc. (AESI) got 45 contestable customers in its RCOA portfolio; while five others listed with Advent Energy, Inc., the groups’ RES intended to cater to economic zone locators.
Energy officials have noted that the RCOA is a major milestone in the deregulation of the power sector because the consumers will finally be gaining their rights to patronize preferred suppliers – bypassing the service of the DUs that they have gotten used to.
But while supply can already be sourced directly from power generators or retail electricity suppliers, the contestable customers will still have to pay for the use of the wires of the transmission and distribution systems because these are essential facilities in bringing electricity to their homes and businesses.
http://mb.com.ph/Business/Energy/20344/151_Meralco_customers_sign_up_for_open_access#.UdPpaTs_sYM
Tariff scheme for EC guarantees pushed
A tariff mechanism via pass-on rate to electricity consumers is being proposed so the country’s electric cooperatives can address cash flow dilemmas on their security deposits for supply agreements or prudential requirements with the Wholesale Electricity Spot Market.
The estimated pass-on impact of such guarantees will be P0.20 per kilowatt hour (kWh) into the bills of the EC’s customers.
It was further proposed that “the charge for payment guarantees shall appear as a separate line item in the EC’s monthly bill to its member-consumers.”
The other key requirement for ECs will be a security deposit that they must post with the National Grid Corporation of the Philippines (NGCP) upon sealing transmission service agreement (TSA) with the system operator.
This has been based on the petition of the Philippine Rural Electric Cooperatives Association, Inc. (Philreca); wherein it sought that rules be laid down for “the collection from consumers of the cost of payment guarantees for the power supply contracts and transmission service agreements entered into by the ECs.”
The application will be subject to public hearings in various areas nationwide – starting this August 20 until October 15 this year.
It has been emphasized that “the purpose of the prudential requirements is to ensure the effective operation of the spot market by providing a level of comfort that the WESM members will be able to meet their respective obligations for the payments as required under the WESM Rules.”
To date, around 26 ECs from Luzon and 22 from Visayas are direct trading participants at the electricity spot market. About 35 of them posted cash bond; while 13 others submitted irrevocable standby letters of credit (SLC) as prudential guarantees.
It must be recalled that power generators are complaining about the non-compliance of WESM-participating ECs on prudential requirements – hence, negating a buffer fund that could have been the recourse of power suppliers if the ECs cannot settle their financial obligations on time.
Philreca stressed that “the existing tariff of the ECs does not provide for surplus funds by way of or in the form of a return on rate base and depreciation,” hence, they cannot correspondingly allot additional cash for their prudential requirements.
The EC group added that “the cost and expenses (relating to security deposits) are not incorporated in the existing tariff”, thus, it is batting for “an urgent need to adopt and implement a tariff mechanism to sustain the ECs’ operational efficiency and financial viability.”
http://mb.com.ph/Business/Energy/20196/Tariff_scheme_for_EC_guarantees_pushed#.UdPpbTs_sYM
PNOC-EC steps up Energy exploration
The board of directors of PNOC Exploration Corporation has approved a budget of P7.042.76 billion for all operations of the PNOC-EC this year, bigger than the P6.568 billion appropriated by the corporation last year.
Gemiliano C. Lopez, Jr. Chairman of the Board of Directors of the PNOC Exploration Corporation (PNOC EC), said yesterday that the prospects for the success of exploration for indigenous sources of energy in the Philippines are brightening.
Addressing the PNOC-EC stockholders meeting, Lopez revealed that the board of directors “increased budget represents the commitment of the PNOC-EC to conduct and intensify exploration and development of indigenous sources of energy in order to augment the energy supply of our country, bring down the cost of energy, ensure its steady and adequate supply and accelerate national economic development in all its aspects.”
Lopez said that the PNOC-EC, which is a subsidiary of the state-owned Philippine National Oil Company (PNOC) will intensify its exploration, development and production of oil, gas and coal in its six service contracts from the Department of Energy.
“We are confident that in the next few years, with our intensified, concentrated and improved field explorations, we shall eventually discover rich petroleum resources underneath our seas and lands to justify production and development of energy resources, including petroleum, coal and gas,” said Lopez.
“Our engineers, geologists, explorers and men in the field are gaining experiencing and getting closer to realizing our dream of acquiring adequate energy resources in our territory,” he added.
Lopez said that this year the PNOC-EC Board of Directors:
1. Endorsed the Management’s recommendation to drill for petroleum and other hydrocarbons in the Mangosteen Prospect, dubbed Service Contract 37 (SC 37), located at Brgy. Balintocatoc, Santiago City, Isabela, where pre-drilling has already been conducted. This has an area of 220,000 hectares, covering Santiago City, and the towns of Echague and Ramon in Isabela, and in Diffun, Quirino Province.
2. Authorized management to seek a joint venture partner for the Service Contract No. 37 project where PNOC EC holds a 100 percent interest.
3. Gave final approval to Nido Petroleum Ltd as partner of PNOC-EC on Service Contract No. 63 (East Sabina) covering 10,560 square kilometers in Offshore West Palawan, following a favorable opinion of the Government Corporate Counsel on the matter. As technical operator and drilling project operator, Nido is tasked to execute drilling operations in the service contract within the sub-phase 2b period.
4. Approved the extension by five years of the Condensate Lifting Agreement with the company’s joint venture partners, Shell Philippines Exploration BV and Chevron Malampaya LLC on the Malampaya Deepwater Gas-to-Power Project (Service Contract No.38). This moves the agreement date from August 1, 2012, to July 31, 2017.
Lopez disclosed that PNOC-EC was granted three new Coal Operating Contracts this year by the Department of Energy. It also submitted a bid for Area 4 (Northwest Palawan) to the 4th Philippine Energy Contracting Round (PECR 4) with a work program for a seven-year exploration of Area 4.
He said the board of directors approved the proposal of the Chairman to create three independent bids and awards committees to ensure transparency and integrity in procurement and other financial transactions in accordance with the Daang Matuwid (Straight Path) policy of the President Benigno Aquino III. Contract bids will be subjected to raffle to avoid collusion.
To safeguard the health of all PNOC-EC personnel, including those in the field and offices, the board approved the proposal of the Chairman for the establishment of Diagnostic Clinic in the company’s main office in the Global City (Fort Bonifacio). The board further strengthened safety measures for all our field personnel.
PNOC-EC is scheduled in December 2013 to start operations for its first Compressed Natural Gas (CNG) service station in Mamplasan, Binan, Laguna. The opening of the first CNG service station will be the start of a government program to provide cheaper fuel and clean energy to the transport sector as an alternative to gasoline. It will result in cutting the cost of transportation for both goods and passengers, thus easing the pressure from the rising costs of imported fuel.
Operation of the mother CNG station in Binan is PNOC-EC’s participation in the Natural Gas Vehicle Program for Public Transport (NGVPPT) program under the Department of Energy, Lopez explained. Its stated objective is to promote the use of indigenous natural gas in the transport sector and improve the air quality in Metro Manila and surrounding provinces.
The project will make use of the natural gas already being produced by Malampaya Deepwater Gas-to Power Project of PNOC-EC in partnership with Shell Philippines Exploration B.V. and Chevron Malampaya LLC from offshore Palawan. In a memorandum of agreement, Shell has turned over to PNOC-EC CNG station in Biñan for operations and management.
The PNOC-EC Board of Directors approved the allocation of P400 million for the project in a resolution on April 5, 2011.
PNOC-EC is also establishing a second CNG service station at the Philippine Port Authority location in Batangas City.
The PPA Board of Directors has likewise approved a resolution allocating a portion of its property in Batangas City for the purpose. Another ‘daughter station’ will also be established shortly in the North, thus expanding the CNG transport in Luzon and eventually the rest of the country. Operation of these stations will benefit thousands of commuters, traders and consumers due to cheaper transport fares.
http://mb.com.ph/Business/Energy/20348/PNOC-EC_steps_up_Energy_exploration#.UdPpaDs_sYM
Power generation
Davao City – The Mindanao Development Authority (MinDA) is pushing for a “50-50 mix” of power sources for Mindanao.
Romeo Montenegro, MinDA director for investment promotion and public affairs, said that more than a decade ago, 83 percent of Mindanao’s power was generated from renewable energy sources, mainly hydro, while oil-based power accounted for only 17 percent of generated power.
Montenegro said that tapping of renewable energy sources is highly imperative, given the fact that a sizable chunk of the new capacities being built in Mindanao will come from coal.
This, he added, is vital to balance the energy mix in Mindanao, and mitigate foreign exchange and environmental costs.
“Although coal provides reliable baseload and high capacity factor, the long-term power development strategy and policy framework being espoused by the MinDA point to diversification of energy sources, with renewable energy high on the agenda,” Montenegro said, adding that a mix of power resources is also vital to answer the ever-increasing electricity need in Mindanao.
http://mb.com.ph/News/Provincial_News/20156/Power_generation#.UdPo8Ts_sYM
Thinking big may start with thinking small
July 1, 2013 10:59 pm
by BEN D. KRITZ
First, a minor clarification: In my column this past Saturday, I described the occasion being marked by an event hosted by Xen Energy Systems Inc. (XESI) and RCBC Bank on Thursday as the formal approval by the Energy Regulatory Commission (ERC) for the implementation of the Kuryentxt Prepaid Electricity service for customers of the Boheco II and Batelec I electric cooperatives in Bohol and Batangas, which was not a strictly accurate explanation of the ERC’s action. In fact, the approval granted by the ERC was an extension of the provisional authority by which the two cooperatives were able to “soft launch” live tests of the system for about 300 customers in their respective areas. The new authority is not ERC’s final approval of the system, but rather an extension of the provisional authority for three years, which allows the cooperatives to expand the prepaid program throughout their service areas at their own discretion.
Which is still very good news, of course, but I am nothing if not obsessive about accuracy. Newspaper deadlines being what they are, Saturday’s column was actually written just prior to Thursday’s event, where I learned I was slightly off-the-mark in my understanding of what was actually happening. My apologies if anyone was misled by it.
While at the event on Thursday, I was asked by my friend and occasional collaborator Richard Heydarian, who lectures at the Ateneo de Manila University and covers geopolitical and economic topics for The Huffington Post and The Asia Times, what I thought the broader significance of the prepaid electric program might be for the Philippine economy. It’s a fair question, but one that is not easy to answer because on the face of it, prepaid electricity does not appear to actually solve any of the Philippines’ larger underlying economic problems. It does not, for instance, help to solve the problem of a looming shortfall in electricity supply, nor does it do anything to moderate the extraordinarily high price of electricity for consumers. What it does is make those costs manageable for a segment of the population that is most vulnerable to them, and while that is eminently worthwhile, objectively it is not a “solution” but an accommodation.
But the remarks of XESI President Ariel de la Cruz during his keynote address revealed that real solutions are not always obvious. While the prepaid Kuryentxt system is an innovative product, what may be the real value of the concept is how it ties together larger business systems—systems on a scale that actually does impact the wider economy—in order to deliver that product. Conceptually, the Kuryentxt prepaid system has three essential components: first, there is the technical infrastructure, the software-as-a-service, meters and associated hardware provided through XESI to manage the actual delivery of the electricity to prepaid customers; second, there is the communication infrastructure to manage all the information that starts at the customer’s prepaid meter and finally, there is the financial infrastructure to manage customer payments, load purchases by local sellers, and the accounts of the distribution utility. De la Cruz describes these as the “essential cogs” in the machine; if one is missing or not turning in perfect coordination with the others, the system simply cannot work.
In order to make it work, XESI’s communications and payment system partners, Philippine Long Distance Telephone Co. (PLDT) and Rizal Commercial Banking Corp. (RCBC), had to apply some forward thinking to develop efficient large-scale applications to help provide a “tingi-scale” service. In PLDT’s case, it was the application of their “Call All” rate package (which is actually a consumer rate package) in a modified form to allow economical communication between the prepaid system servers and devices called concentrators, which collect the usage data from groups of prepaid meters. In RCBC’s case, it was the development of the payment resolution system that manages transactions that, in most cases, do not exceed P100. Either of these corporate giants could have easily declined to take part in a system that requires them to manage thousands of tiny transactions, and from a stakeholder perspective they probably would have been completely justified in doing so; cost-benefit economy usually follows scale, not volume. At the time XESI presented their business case, it was not actually certain whether the prepaid system would successfully navigate the regulatory process, and while consumer and distributor interest in the system has always been strong, “strong interest” does not always translate well to “reliable market estimates.”
The risk accepted by PLDT and RCBC now looks as though it will be handsomely rewarded; XESI’s conservative estimate of the potential customer base for the Kuryentxt system is two million within five years. More importantly, PLDT and RCBC have provided new models for making fundamental economic improvements. Using the templates established by their application to the Kuryentxt prepaid electricity service, the communications and financial management models can now be applied to any number of innovations benefiting Pinoy consumers, such as prepaid service for other utilities or microbanking.
It is not that the technology or processes being used are novel—in fact, they are not new at all—it’s the perspective that is. The Philippines’ “heritage of smallness” (in the words of literary giant Nick Joaquin) is generally criticized, and correctly, for being a significant handicap to the nation’s developing on the scale required to benefit nearly 100 million people. Large-scale development does take place—the expansion in recent years of sectors like banking and business process outsourcing are good examples—but do not register on the greater part of the population because they do not “reach down” to the small scale, and as a consequence, do not really improve the overall economy. By working in the other direction, finding a way to satisfy a consumer need at the level of “smallness” first and then consolidating that need into a profitable critical mass, XESI and its partners RCBC and PLDT have demonstrated a different paradigm; one that, true enough, does tend to perpetuate the “smallness” of most Pinoys’ outlook, but one that has more practical, immediate and wide-ranging impact.
http://www.manilatimes.net/thinking-big-may-start-with-thinking-small/14852/
More power coops, DUs to go prepaid
Published on Monday, 01 July 2013 00:00
More families and households in the country will soon be able to buy their electricity in portions as various electric cooperatives and private distribution utilities nationwide have already indicated their enthusiasm in offering prepaid electricity to their customers.
E-commerce solutions company Xen Energy Systems, Inc. said that it is presently in talks with 17 more cooperatives and private distribution utilities which are all excited to go prepaid anytime now.
Xen Energy president Ariel Dela Cruz said that a number of these cooperatives and distribution utilities have already finished their pilot testing while some are still undergoing into pilot tests.
The next step after conducting the tests, Dela Cruz said, is for Xen Energy and the distribution utility to jointly file to the Energy Regulatory Commission (ERC) an application to sell pre-paid electricity cards to consumers.
“A lot of them have already signified their intention to file. For most of them, we are just awaiting for certain paper works,” he stated.
Xen Energy has been allowed by the ERC to serve as the systems integrator under the prepaid electricity scheme.
Among the interested cooperatives and private distribution utilities, majority are from Visayas and Mindanao.
Xen Energy said that those who have already finished their respective pilot tests include San Fernando Electric Light & Power Company, Inc. (Sfelapco), Cagayan Electric Power and Light Company, Inc. (Cepalco), Tarlac I Electric Cooperative, Inc. (Tarelco 1), Davao del Norte Electric Cooperative, Inc. (Daneco), Zambales II Electric Cooperative, Inc. (Zameco 2), Zambales I Electric Cooperative, Inc. (Zameco I), and Biliran Electric Cooperative, Inc. (Bileco).
Meanwhile, those which have upcoming pilots include Bohol I Electric Cooperative, Inc. (Boheco I), Victorias-Manapla-Cadiz Electric Service Cooperative (Vresco), South Cotabato I Electric Cooperative, Inc. (Socoteco 1), Don Orestes Romualdez Electric Cooperative (Dorelco), Leyte V Electric Cooperative (Leyeco 5), Camarines Sur III Electric Cooperative (Casureco 3), Camarines Norte Electric Cooperative (Canoreco), Cagayan I Electric Cooperative, Inc. (Cagelco 1), Negros Occidental Electric Cooperative, Inc. (Noceco), and Iligan Light and Power, Inc.
The ERC has already given its go-signal to two electric cooperatives to sell pre-paid electricity loads to consumers. They are the Batangas I Electric Cooperative, Inc. (Batelec I) and Bohol II Electric Cooperative, Inc. (Boheco 2).
Dela Cruz said that deployment of the prepaid meters in both Batelec 1 and Boheco 2 are undergoing at present.
“They have committed to deploy 1,000 meters each at the start. We’re deploying so hopefully we finish deployment by July and then start commercially by then,” he said.
According to Dela Cruz, the target customers for prepaid electricity are those with monthly bills not more than P1,000. This segment, he added, represents 90 percent of the consumers covered by the cooperatives in the country.
“They are the perfect candidates for prepaid,” said Dela Cruz, while noting that delinquent customers or those which are having a hard time settling their electricity bills are also the ones which would likely sign up under the prepaid electricity scheme.
The prepaid electricity scheme is a system seen to help consumers budget their electricity consumption and will work in ways similar to reloading mobile phones.
Signing up will be voluntary as electricity consumers can still opt to remain with their traditional connection.
According to the Manila Electric Co. (Meralco), consumers of prepaid electricity can save anywhere from 5 percent to 12 percent in their monthly electricity bills.
Meralco, for its part, is aiming for the full commercial rollout of its prepaid electricity service by the second quarter next year in Rizal province.
The country’s largest power distributor is not tying up with Xen Energy but instead, it will tap GE as systems integrator for its network.
Xen Energy is eyeing to see a 20 percent growth among prepaid electricity users in the country over the next five years.
http://www.malaya.com.ph/index.php/business/business-news/34732-more-power-coops-dus-to-go-prepaid
Energy developers assured of government support
“While the country’s power supply is currently dominated by coal-fired power projects because of the relatively low price of coal and the comparatively shorter time to put up coal-fired power plants, renewable-energy sources such as wind, solar, hydro and geothermal are still very viable power-supply sources to ensure sustainable power generation and fuel diversity,” Petilla said.
He added the Department of Energy (DOE) does not favor any particular type of fuel or fuel source, and that the government wants to ensure a sustained supply balancing the power-supply sources.
Petilla said the DOE is focused on solving the short-term power-supply problem in Mindanao since the region is already poised to take on around 1,000 megawatts (MW) of new supply come 2015 to 2016 with the completion of several new power projects in Davao and Sarangani, among others.
Though most of these plants are coal-based, Petilla said he foresees more renewable-energy projects to come onstream next.
Mario C. Marasigan, DOE Renewable Energy Bureau head, said geothermal energy is already staging a comeback with new geothermal fields being developed and existing areas gearing up for expansion.
He added that the Philippines is Asia’s pioneer in geothermal energy and the second-largest producer in the world, next to the United States.
Tony Yee, Philippine Geothermal Production Co. Inc. president, said his company is encouraged by the enthusiasm from the DOE and the support it gives to developers and investors.
“With the fresh service contracts, we renew our commitment to deliver clean geothermal energy and strengthen our position to enhance the value of Tiwi and Mak-Ban by implementing resource development projects over the next years,” he added.
The Department of Energy executed the geothermal service contracts on April 25, 2013 for the Tiwi geothermal field in the province of Albay, and Mak-Ban geothermal field in the provinces of Batangas and Laguna, granting Philippine Geothermal the exclusive right to operate these fields for 25 years, renewable for another 15 years.
Petilla said the DOE is ready to help facilitate the permits and approvals for crucial power projects and assist in gaining social acceptability, a tedious but vital step for environmentally-critical endeavors.
“The DOE is looking at setting up a bureau or an office that will concentrate on local government unit [LGU] permits and social concerns. Although I admit that the department does not have power over local governments, we hope to be able to give valuable assistance to investors,” he said.
Power generation projects undergo a long and rigorous process that involves securing an Environmental Compliance Certificate from the Department of Environment and Natural Resources, DOE certifications, accreditations as well as approvals from the National Commission on Indigenous Peoples and the LGUs among others.
POWERnEWS 
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