In this article, Agham - Advocates of Science and Technology for the People’s presents its observations on the issue of energy shortage and the President’s bid for emergency powers based on a review of the data and computation of the DOE. The paper then cautions against a possible power shortage, artificial and real, based on the review of the character of the ownership of the country's power system.

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AGHAM Bits on Power Shortage and Emergency Powers
For several months now, Department of Energy (DOE) Secretary Jericho Petilla has been
campaigning for the granting of emergency powers to President Aquino that would enable the
government to contract additional capacity to address the supposedly shortage in supply next
year.
However, during the House Committee on Energy discussion on the joint resolution authorizing
President Aquino emergency powers to establish additional capacity held on October 20, it was
revealed that while there is no shortage in supply next year but at worst, there would be thin
reserves that could be prevented if the power plants would not go into planned and forced
outages.
The committee concluded that there is no rush to grant emergency powers to the President, no
need to contract additional capacities through purchase or rental and that the remaining option
that needs to be discussed are the terms and conditions of the ILP program.
This adequacy of supply is corroborated by a review of the DOE's data. If the 9,886 MW
projected demand for the second week of April, the time where the reserves would be thin, is
plotted against the 2013 list of power plants in Luzon, it would show that the fourteen biggest
power plants, would be able to supply that demand. Add to this capacity the committed capacity
that would be available next year and the additional capacity that private generators have
offered for the ILP program, then theoretically, the supply would be able to meet the demand.
In this article, Agham - Advocates of Science and Technology for the People’s presents its
observations on the issue of energy shortage and the President’s bid for emergency powers
based on a review of the data and computation of the DOE. The paper then cautions against a
possible power shortage, artificial and real, based on the review of the character of the
ownership of the country's power system.
Agham then concludes that the answer to the country's energy insecurity is the repeal of the
Electric Power Industry Reform Act (EPIRA) which leaves the country's power system in the
hands of private companies and leaves the government inept in addressing the shortage.
Manufactured Power Shortage by the DOE?
On October 20, the House Committee of Energy held a hearing to discuss the joint resolution
authorizing President Aquino emergency powers to establish additional capacity to address the
looming power shortage in Luzon in 2015. This idea was being insisted by DOE Secretary
Petilla even before Aquino delivered the State of the Nation Address and was publicly
announced by Aquino in September.
However, DOE Assistant Director Irma Exconde presented that, based on their computation,
Luzon will only be experiencing a shortfall of 21-31 MW in reserves the first two weeks of April
2015. The National Grid Corporation of the Philippines representative explained that if this worst

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Telephone: +632 998 4226 E-mail: secretariat@agham.org URL: www.agham.org
case scenario indeed happen, it would mean one-hour rotating brown outs on peak hours once
a week.
This scenario is so much different from Petilla’s earlier pronouncements that Luzon could
experience a power supply shortfall of up to 1200 MW, which translates to months of outages in
2015. Petilla has been urging the Congress and Senate to grant the President emergency
powers to allow the government to contract back-up power at the cost of about 6 billion pesos
and compel private companies with generators to participate in the Interruptible Load Program
or ILP.
The earlier presentation of DOE in the budget hearings said that there would be a shortfall from
180 MW up to 285 MW in the two weeks of April and 37 MW to 100 MW in the last week of May.
This shortfall is said to increase if the El Nino is factored in. The reserve was computed by
subtracting from the available capacity the projected demand and regulating reserve.
This computation is already questionable because the base or the available capacity used by
the DOE is way below the reported dependable capacity of the 2013 existing power plants as
stated in their website. In the 2013 statistics of the DOE, the dependable capacity in Luzon is
11,519 MW while the peak demand is 8,305 MW, leaving a reserve of 3214 MW. But in the
presentation of the DOE at the budget hearing, Luzon would have the lowest available capacity
of 8441 MW at the first week of April and the highest supply at 9943 MW.
During the Monday hearing, DOE has yet again changed their computation. The officials
reported the installed capacity of 12,769 MW and subtracted the dependable capacity of 11,389
MW and subtracted another factor, the planned outage to make up for the existing available
capacity. The planned outage is the amount of capacity that will not be online at the projected
time because of the planned maintenance schedule of the power plants. They then added the
committed capacity or the additional power that is promised to be delivered at that time.
(Available capacity = installed capacity - dependable capacity - planned outage + committed
capacity).
What is questionable in this computation is they introduced another factor to arrive at the
available capacity, the forced outage or the amount of power that could possibly be lost
because of the unplanned outages of the power plants. The DOE thus have a base of available
capacity minus the planned outage and forced outage. (Available capacity = Installed capacity -
dependable capacity - planned outage + committed capacity - forced outage)
From this available capacity, the additional capacity, as indicated by the private companies who
are willing to inject their power in the grid, is added. The system peak demand is then
subtracted from this to get the gross reserve.
The required regulating reserve is then subtracted from the available capacity to get the net
reserve. Values for the required contingency reserve and dispatchable reserve are also included
in the presentation but were not subtracted from the gross reserve. In this long computation, the
DOE forecasts a shortfall in reserve in the first two weeks of April.
The computation of the DOE where the net reserve is gotten (Available capacity + committed
capacity + additional capacity) - (Peak demand + planned outage + regulating reserve +
estimate forced outage) is different from the computation of the earlier presentation of net
reserve (available capacity - projected demand = gross reserve - regulating reserve = net
reserve).

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Telephone: +632 998 4226 E-mail: secretariat@agham.org URL: www.agham.org
As pointed out by POWER convenor and former Representative Teddy Casino at the hearing,
the addition of forced outage as factor on available capacity is based on the assumption that
the problems or loss of power of this year, as represented by the estimated forced outage, is
going to happen again at the same time next year. Even the projected outage is questionable
since it cannot be verified if the loss of power at that time is true and necessary.
The forced and planned outage factors are negated by private power producers when asked
how much capacity they could provide, the Philippine Independent Power Producers
Association (PIPPA) representative stated that they have more than 11000 MW capacities
available to supply the power needs next year and would strive for a 100% availability of their
dependable capacity.
Table 1: Difference of the computation of DOE on Power Shortage at the Budget Hearing
and Committee Hearing
DOE Computation 1 presented at the Budget
Hearings
DOE Computation 2 presented at the
Energy Committee Hearing on
Emergency Powers
Variables with
Maintenance
and Forced
Outage and
with El Nino
With El Nino Variables
Available
capacity
Installed capacity 12769
Dependable capacity 11389
Available Capacity 8721 8135 Capacity less Planned outage 8721
+ Committed 542
+ Additional Capacity 424
- Estimated Forced outage 712
Available Capacity 8975
Demand Projected Demand 8660 8660 System peak demand 8660
Available
Capacity-
Projected
demand =
Gross reserve
Gross Reserve 61 -525 Gross reserve 315
Gross reserve-
regulating
reserve =
Net reserve
Regulating
Reserve
346 346 Regulating Reserve 346
Net reserve - 285 - 871 Net reserve (gross reserve-
regulating reserve)
- 31
Final required
need
Contingency
reserve
647 647 Contingency reserve 647
Dispatchable reserve 647
Required
additional capacity
to eliminate
Red/Yellow Alerts
=
regulating reserve
+ contingency
reserve -
gross reserve
932 1518 Required reserve =
Regulating reserve +
Contingency reserve +
Dispatchable reserve
1642

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Private companies have also disclosed that on top of this capacity, they offered their additional
committed capacities that would come online next year and their willingness to participate in the
ILP to avert the power shortage if there ever will be one next year. The potential savings from
energy efficiency and conservation efforts are not even factored in the supply.
The difference in the news and the computations in the earlier presentation and latest
presentation show that there is no definite figure on the amount of shortage next year. The DOE
even changed the framing of the shortfall from "required additional capacity needed to eliminate
the red alerts" to "required reserves". It seems that the DOE is constantly changing its
computation and figures and makes up its assumptions arbitrarily, whichever will look worse.
The presentations in the hearing led those attending to the conclusion that there will be no
actual shortage in supply next year but at worst, the summer would bring only thin reserves.
These could be prevented if the DOE exerts due diligence to ensure that the planned and forced
outage would not occur.
The committee also stated that there is no rush to grant emergency powers to the President, no
need to contract additional capacities through purchase or rental and that the remaining option
that needs to be discussed are the terms and conditions in the ILP.
The DOE secretary Petilla and the President must give an explanation for issuing confusing
statements and threatening the public with a power shortage based on data and computation
that they could not even defend.
Possible artificial power shortage
While the issue on emergency powers has been temporarily parked and no actual shortage in
supply has been proven, the consumers and the public are still not safe from an artificial power
shortage in the critical summer months next year when the demand is projected to spike as
what happened in the 2013 Meralco unprecendented price hike.
The removal of supply from the market, where several companies declared outages and
maintenance of their power plants while the other plants withheld their supply, created an
artificial shortage in supply and raised the price of electricity for the benefit of the rest of the
generating companies.
Since 85% of the installed capacity of Luzon in 2013, are controlled by Independent Power
producers (IPPs), the operations of these power plants are decentralized and private and
cannot easily be verified by the public if they indeed go on planned and forced outages next
year .
Of the 20 biggest power plants that have a dependable capacity of 10598 MW, 33% is
controlled by San Miguel Energy Corp, 17% by Aboitiz Power Corp, 15% by Lopezes, 33 % by
other corporations and 14% by PSALM/ NPC.
Of these power plants, 7 are considered generators that set the price in the Wholesale
electricity Spot Market (WESM). These plants are also considered pivotal generators because
they could offer any price and yet still be dispatched especially if the demand is high. These
plants have a greater opportunity to influence the market price by exercising their market power
either through capacity withholding or offering prices above their usual price offers.

5. Table 2. List of critical power plants in terms of capacity, owner, market influence and Meralco partnership
Power
plant
Fuel
Type
Installed
Capacity (MW)
Dependable
Capacity (MW)
Registered Name Owner WESM Pivotal
and
Price Setter
generators
MERALCO contract
Sual Coal 1,294.0 1,294.0 TeaM Sual Corp SMEC yes San Miguel Energy Corp.
(SMEC)
Ilijan NG 1,271.0 1,200.0 KEPCO (Ilijan Corp) SMEC yes South Premiere Power
Corp. (SPPC)
Sta. Rita NG 1,060.0 1,036.0 First Gas Power Corp Lopez yes First Gas Power Corp.
(FGPC) – Sta. Rita
Pagbilao Coal 764.0 764.0 TeaM Pagbilao Corp Aboitiz Power Corp. yes Therma Luzon Inc. (TLI)
Kalayaan
PSPP
Large
Hydro
739.2 720.0 CBK Power Compay
Ltd
PSALM
Mariveles
Coal
Coal 651.6 495.0 GN Power Marivels
Coal Plant. Ltd
GN Power Mariveles Coal
Plant Ltd.Co
Malaya Oil
Thermal
650.0 610.0 KEPCO Philippines
Corp
PSALM
Masinloc Coal 630.0 630.0 Masinloc-Power
Parnters Ltd.
AES Transpower Pte.,
Ltd.
Masinloc Power Partners
Corp. (MPPC
Limay
CCGT
Gas
Turbine
620.0 540.0 Panasia Energy
Holdings Inc
SMEC yes
Calaca Coal 600.0 510.0 SEM Calaca Power
Corp.
SEM Calaca Power Corp. SEM-Calaca Power Corp.
(SCPC)
San
Lorenzo
NG 530.0 523.0 First Gas Power Corp Lopez FGP Corporation (FGP) –
San Lorenzo
Quezon
Power
Coal 511.0 460.0 Quezon Power Phils. Quezon Power Phils. Quezon Power Phils Ltd.
Co. (QPPL)
MakBan Geother
mal
442.8 333.9 AP Renewable Inc. Aboitiz Power Corp.
San
Roque
Large
Hydro
411.0 411.0 San Roque Power
Corp
SMEC
Magat Large
Hydro
360.0 360.0 SN Aboitiz Power, Inc Aboitiz Power Corp.
Angat Large
Hydro
246.0 135.0 PSALM NAPOCOR
TMO Diesel 242.0 150.0 Thema Marine Inc. Aboitiz Power Corp. yes Therma Mobile Inc. (TMO)
Bauang
DPP
Diesel 235.2 180.0 1590 Energy Corp 1590 Energy Corp. yes
Tiwi Geother
mal
234.0 207.9 AP Renewable Inc. Aboitiz Power Corp.

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According to the 2013 WESM annual report, the most frequent generator which qualified as
price setter and pivotal generator in the billing period of April 2014 is oil-based power plant
Baunang DPP of 1590 Energy Corp which became such 103 times. This is followed by coal-
fired power plant Sual CFTP of SEMC which became such 31 times. Other plants which are
price setters and pivotal power generators are Pagbilao CFTP of Aboitiz, and natural gas plants
Kepco Ilijan of SMEC and Sta. Rita FGPP of the Lopezes. Oil-based power plants, Subic Power
Corp, Limay CCGT, Thermal Mobil and TransAsia are also considered influential in the WESM.
Of these 9 plants, 5 companies have Power Supply Agreements with Meralco. In the billing
period of November 2013, where the unexplained forced outages occured, San Miguel Energy
Corp. (SMEC) supplied the highest average cost Php15.5527/ kWh, followed by Therma Mobile
(TMO) of the Aboitiz, at Php 6.2030/kWh. The Sta. Rita Plant of Lopez, the South Premier
Power Corp (SPPC), Quezon Power Phils Ltd, FGP Corporation (FGP) of San Lorenzo power
plants had an average generation cost of more Php5/ kWh.
These 5 companies, along with the contracts and sources of Meralco has an average
generation cost of Php 5.6673/ kWh for the billing period of November 2013. This generation
cost could go up again dramatically if Meralco source its supply from WESM as what it did in the
last quarter of 2013.
Repeal EPIRA
This leaves the question on how would the consumers be protected from power shortage,
artificial or real, and market manipulation. On the one hand you have a government, who
instead of doing its mandate of ensuring affordable, reliable and adequate supply of electricity
has been painting doomsday scenarios to bully consumers and lawmakers into measures that
would serve whatever interest they have on emergency powers. On the other hand, you have
owners of power plants who collude and could create a repeat of the November 2013 supply
situation that brought us the massive increase in power rates at that time.
The Filipino consumers must guard against both and instead of giving in to the threats of power
shortage, we could push for the repeal of EPIRA and hold the government accountable for
ensuring energy security in the country.
The yearly power shortages can be prevented if the government would be able to put electric
power plants online in a planned and predictable manner. Under the EPIRA, except through the
emergency power clause, the government is helpless in this case. To avoid this chronic
problem, the solution is not to manufacture crises but to dispose of the EPIRA law altogether.#