WESM Key to averting Visayas power shortage

MARITES S. VILLAMOR, Visayas Bureau Chief, BusinessWorld08/19/2008 03:18 AM

CEBU CITY, Philippines — The chambers of commerce in the Visayas are pushing for the commercial operations of the electricity spot market here to prevent a power shortage starting late this year.Representatives of the 16 Visayas chambers, who gathered here on Friday last week for the 17th Visayas Area Business Conference, passed a resolution asking President Gloria M. Arroyo to order the start of operation of the Wholesale Electricity Spot Market (WESM) in the Visayas.The businessmen also pushed for the approval of the time-of-use (ToU) rates for the Visayan Electric Co., Inc. and the promotion of private and public sector investments in renewable energy development. The ToU scheme involves varying electricity rates according to peak and off-peak hours of demand and supply. Hence, a company that is flexible enough could move part of its operations to the off-peak evening-to-dawn hours to avail of cheaper rates.Related resolutions that were passed during the conference urged:the Energy department to require all electric cooperatives to provide the transformers and meters for free to their clients and reimburse those who were made to pay the costs; andthe President to order the Department of Energy (DoE) to fast-track the implementation of the National Biofuels Program.The Energy department has deferred WESM operations in the Visayas due to inadequate capacity in both power generation and transmission facilities, as revealed in a study conducted by consultancy firm Intelligent Energy Systems (IES).Visayas businessmen said they were aware that the lack of capacity could lead to higher power rates. But they wouldn’t mind paying for more expensive power rather than having none at all, said Carlos P. Co, chairman of the Cebu power core group, a multi-sectoral group led by the Cebu Chamber of Commerce and Industry.National Power Corp. and National Transmission Corp. officials earlier warned that the Cebu-Negros-Panay grid will run short of power starting in the last quarter of this year until the early part of 2010, when the first of five coal-fired power plants that are being constructed in Cebu will be completed."We are aware that power cost will go up if we operate the WESM now. But on the other hand, we will run out of power if we don’t operate the WESM," Mr. Co said."It’s better to have more expensive power than none at all. We need the WESM," he stressed.He believed that any rate increase will be minimal, considering that demand will rise only during peak hours. Existing demand is already covered by bilateral contracts between the distribution utilities and end-users. Hence, only the rate for the contested demand during peak hours will go up. If WESM is allowed to operate, Mr. Co said some hidden excess power supply could be traded over the spot market.WESM operator Philippine Electricity Market Corp. (PEMC) has said it was ready to operate the market. WESM Visayas has been on trial operations since 2005.PEMC had targeted to go live in the Visayas last January. Commercial operations was postponed to February, then to March and further to April 26, until the DoE deferred market operations due to findings of the IES study.The power supply situation in Cebu, Negros and Panay is projected to stabilize in early 2010 with the completion of the first of the three 82-megawatt coal-fired plants that are being built by the consortium of Global Business Power Corp., Formosa Heavy Industries and Abovant Holdings (a joint venture of Aboitiz Power Corp. and Vivant Corp.)The second and third units are scheduled to go on stream in June and September 2010.KEPCO-SPC Power Corp. also targets to complete its two 100-megawatt coal-fired plants in Naga in 2011.