​Power Situation Update

PHILIPPINES - In Brief 13 Mar 2015 by Romeo Bernardo

---

In its latest update published today, the Department of Energy listed 240 companies that have signed up for the Interruptible Load Program (ILP) under which participants will voluntarily run their own generator sets instead of drawing power from the grid, should there be a power supply shortage. The commitments, representing over 900 MW of generating capacity, should allay fears of a crippling power crisis in the coming months, particularly in the mid-March to mid-April period when the Malampaya natural gas facility is scheduled for maintenance shutdown (with the associated power plants operating at 60% capacity on alternative fuel). In fact, we gathered from a senior official of Meralco, Metro Manila's electricity distributor, that the odds of a power outage this summer is on the low side. Since the problem is one of reserve deficiency, his assessment is that only a significant forced outage (i.e., breakdown of plants with combined capacity of over 900MW) would lead to rotating blackouts. He also pointed out that a new 100-MW plant will be commissioned by mid-March, in time to add to capacity. This leaves the passage of a proposed congressional joint resolution, giving the President emergency powers specifically to implement the ILP, irrelevant in our view insofar as dealing with the supply gap is concerned. The measure remains stuck to date in the bicameral conference committee with representatives from the two houses of congress unable to agree on who - government or consumers - will shoulder the cost of compensating the participants in the ILP. Even if consumers were to shoulder the cost, we think the impact on the headline inflation rate will be manageable conside...