1 / 32

Philippine Power Situationer

Philippine Power Situationer. Joint Congressional Power Commission Ernesto B. Pantangco President Philippine Independent Power Producers Association February 17, 2011. Outline. PIPPA Background Assessing Power Supply-Demand Balance Lowering Power Rates

tommy
Télécharger la présentation

Philippine Power Situationer

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Philippine Power Situationer Joint Congressional Power Commission Ernesto B. Pantangco President Philippine Independent Power Producers Association February 17, 2011

  2. Outline • PIPPA Background • Assessing Power Supply-Demand Balance • Lowering Power Rates • Revisiting Proposed Amendments to EPIRA

  3. Background on PIPPA PIPPA Philippine Independent Power Producers Association • Organized in mid 90’s as a non stock non profit association • Members have a total Installed Capacity 8,110MW • Composed of 9 Board members and 5 officers representing major players in the industry. • Forum to share and discuss common concerns • Represent common interests of private sector power production • Coordinate efforts between members and government institution like DOE, DOF, PSALM, etc.

  4. Outline • PIPPA Background • Assessing Power Supply-Demand Balance • Lowering Power Rates • Revisiting Proposed Amendments to EPIRA

  5. LUZON’S SUPPLY-DEMAND BALANCE BARELY MEETS REQUIRED RESERVES, SUPPLY CRUNCH LARGELY AFFECTED BY THE SCHEDULED RETIREMENT OF MALAYA & ENTRY OF COMMITTED POWER PLANTS GN POWER: 600MW BACMAN II: 33.55MW BACMAN II: 40.8MW Source: Derived from latest DOE forecasts, Demand growth 4.6%

  6. VISAYAS SUPPLY-DEMAND BALANCE MOVES TOWARDS A SURPLUS WITH 638 MW OF NEW CAPACITIES COMING FROM 2010-2011… PEDC: 160MW KSPC: 200MW PANAY BIOMASS: 17.5MW NASULO: 20MW CEDC: 240MW Source: Derived from latest DOE forecasts, Demand growth 4.6%

  7. WITH WESM VISAYAS IN COMMERCIAL OPERATIONS, SINGLE GRID TREATMENT SHOULD SHIFT SURPLUS TO LUZON TO MITIGATE BREACHED REQUIRED RESERVE MARGIN LEVELS Source: Derived from latest DOE forecasts, Demand growth 4.6%

  8. MINDANAO IS ALREADY SUFFERING FROM TIGHT RESERVE LEVELS – WILL BE REQUIRING 98MW-401MW IN THE NEXT FIVE YEARS CABULIG HYDRO :8MW MINDANAO III: 50MW SIBULAN HYDRO :42MW Source: Derived from latest DOE forecasts, Demand growth 4.6%

  9. HOW MUCH RESERVE CAPACITY DOES A GRID REALLY NEED? • AGE AND CONDITION OF POWER PLANTS • RELATIVE SIZES OF INDIVIDUAL POWER PLANT UNITS – MORE LARGE-SIZED GENERATING UNITS REQUIRE HIGHER LEVEL OF RESERVES • CONDITION/RELIABILITY OF TRANSMISSION SYSTEM • GENERATION CAPACITY MIX – HAVING MORE “INTERMITTENT SOURCES” (e.g. HYDRO AND WIND) REQUIRE HIGHER LEVEL OF RESERVES

  10. PRESCRIBED RESERVE MARGINS Note: * equivalent to largest single unit for each grid

  11. TAKE AWAY POINTS: KEEPING THE LIGHTS ON LUZON-VISAYAS • THE FOLLOWING WILL SIGNIFICANTLY HELP IN AVOIDING LUZON SUPPLY CRUNCH IN 2011: • DELAY/POSTPONE RETIREMENT OF MALAYA • ON-TIME OPERATIONS OF NEW COAL CAPACITIES IN VISAYAS • UNRESTRICTED TRANSFER OF POWER BETWEEN LUZON-LEYTE HVDC SUBMARINE CABLE LINK • WESM OPERATIONS IN LUZON-VISAYAS SHOULDCONTINUE, PRICE SIGNALS INCENTIVIZE POWER PLANTS TO RUN • CRITICAL PERIOD STARTS AGAIN IN 2013 • COMPLETION OF PROJECTS SHOULD BE MONITORED

  12. TAKE AWAY POINTS: KEEPING THE LIGHTS ON MINDANAO • SHORTAGES CAN BE ALLEVIATED THROUGH THE FOLLOWING MEASURES: • UTILIZE SELF-GEN CAPACITY – TOTAL OF 50MW-180MW (E.G. DOLE PHILS., PICOP) • BRING IN AND UTILIZE IDLE LAND-BASED POWER PLANTS AND POWER BARGES (E.G. ILIGAN DIESEL - 100MW, DURACOM AND EAST ASIA - 200MW) • BRING POWER BARGES 117 (NASIPIT, ADN) AND 118 (COMPOSTELA VALLEY, ADN) ON LINE SOON – 200 MW • HOWERVER, WE SHOULD MAKE SURE ANY EXPENSIVE SOLUTIONS TO ADDRESS THE POWER SHORTAGES ARE KEPT SHORT TERM. • ERC SHOULD ASSURE COST RECOVERY OF THESE SOLUTIONS FROM ELECTRICITY CONSUMERS SO THAT GOVERNMENT AND TAXPAYERS NEED NOT SHOULDER THEM • WESM OPERATIONS SHOULD BE PUSHED TO ENABLE OPERATIONS OF UNDERUTILIZED CAPACITIES • DEMAND SIDE MANAGEMENT SHOULD BE SERIOUSLY CONSIDERED, i.e. VECO Interruptible program in Cebu

  13. Outline • PIPPA Background • Assessing Power Supply-Demand Balance • Lowering Power Rates • Revisiting Proposed Amendments to EPIRA

  14. OUR POWER RATES IN MANILA CONTINUES TO BE ONE OF THE HIGHEST IN ASIA… (MERALCO) (MERALCO) Source: Study conducted by International Energy Consultants , PCCI presentation

  15. THIS IS BECAUSE WE HAVE THE HIGHEST INTRINSIC COST OF SUPPLY • High dependence on imported fuel sources • Higher effective cost of fuel sources (coal, oil) because Philippine government has stopped subsidies – Malaysia and Indonesia use of coal, oil and natural gas for power generation are subsidized • Cost of natural gas power generation is priced using a formula which approximates imported Natural Gas price – chunk of which is government royalties IMPORT: 34% INDIGENOUS: 66% IMPORT: 28% INDIGENOUS: 72% IMPORT: 0% INDIGENOUS: 100% Source: Study conducted by International Energy Consultants , PCCI presentation

  16. COMPARISON OF GOVERNMENT SHARE ON NATURAL GAS DOMESTICALLY USED FOR POWER GENERATION Cost of Natural Gas Level of Royalties Sources: 1. US Embassy in Indonesia. Gas sold to domestic market is typically priced 1/3 less than LNG sales. 2. Unocal Thailand Fact Sheet. Royalty paid from 1981-2003 is $1.4 Billion for 5.561 Tcf of natural gas. 3. Price of gas sold by government owned PVN to government owned EVN is $3.22/MMBtu. 4. Petronas. Government subsidy on domestically used natural gas ~$1.72Billion per year. Gas rate to TNB is RM6.4/MMBtu (~$1.78/MMBtu) *Figures derived 2007

  17. 300 250 200 US $ Billion 150 100 50 - MANY GOVERNMENTS INTERVENE AND SUBSIDIZE – SHIELDING CUSTOMERS FROM PRICE INCREASES 7% of GDP 3% of GDP 14.00 12.00 10.92 10.93 10.00 8.00 US $ Billion 6.00 4.00 The ECONOMIST. “RECOIL” , “Double, Double, Oil And Trouble” , “Crude Measures”, May 29th 2008 2007 Key Indicators: Inequalities in Asia. ADB 2.00 - Malaysia Indonesia Subsidies OUR ASIAN NEIGHBORS HAVE INHERENT ADVANTAGE WITH SUBSTANTIAL AMOUNT OF INDIGENOUS ENERGY SOURCES AND CONSEQUENTLY DEEPER POCKETS TO SUBSIDIZE DOMESTIC USE OF ENERGY SOURCES…

  18. MOREOVER, THE PHILIPPINES ALSO HAS ONE OF THE MORE PROGRESSIVE POWER REFORMS… • Operational Wholesale Electricity Spot Market (WESM) in Luzon and Visayas • Excluding market intervention periods, prices reflect full and true cost of power • Nodal Pricing which illustrates high cost of losses caused by archipelagic nature of power grids • Generation charges are full pass through with fuel and FOREX adjustments • Removes subsidies and distortions caused by lagged adjustments – e.g. GRAM, ICERA deferred adjustments • Enables financing for new investments OUR “LONG-TERM” POWER REFORM POLICIES ARE MORE SUSTAINABLE - MARKET DISTORTIONS CAUSED BY SUBSIDIES AND “SHORT-TERM” POPULIST POLICES WILL EVENTUALLY EXPERIENCE POWER SHORTAGES AND/OR PRICE SHOCKS Source: Study conducted by International Energy Consultants , PCCI presentation

  19. CONCEPTUALLY, THERE TWO WAYS OF BRINGING POWER RATES DOWN: (1) FISCAL POLICY ; AND (2) MARKET COMPETITION FISCAL POLICY COMPETITION • More plants should be built: Right mix of assets, Right mix of fuels • Eliminate market distortions – correct price signals • Stable and consistent local government policies • Push for Open-Access to start • Prevent market dominance - increase number of competing generation/supply companies • Choice for customers, more specific matching of customers and suppliers. • Strengthen/Optimize customer sizes (Electric Cooperative loads) • Tax parity among fuels: • Natural Gas Royalty reduction – push for Senator Enrile’s SBN 2 of 2010 • Remove redundant taxation • “Double” taxation on distribution charges and transmission • Push for Senator Enrile’s SBN 3 of 2010 or the Uniform Franchise Tax Measure – flat 3% on the gross distribution income of DUs in lieu of all other taxes

  20. Outline • PIPPA Background • Assessing Power Supply-Demand Balance • Lowering Power Rates • Revisiting Proposed Amendments to EPIRA

  21. ALTHOUGH WE ARE STILL EXPERIENCING TRANSITION PAINS, OUR POWER REFORMS APPEAR TO BE WORKING… • There is an emerging clarity in the rules governing the industry • More level playing field, market dominance of a single entity removed • Increased private sector participation and capacity improvements large investments, translating to improved supply • Excluding market intervention periods, wesm prices reflect true cost of power – price signals enable economic dispatching and operations of “dormant” power plants and underutilized capacities

  22. PSALM HAS BEEN ABLE TO MAKE SIGNIFICANT PROGRESS IN PRIVATIZING NPC’S GENERATION TO DATE, PSALM HAS PRIVATIZED 4320 MW OR 98% OF NPC GENERATING ASSETS IN LUZON AND VISAYAS – SATISFYING 1 OUT OF 2 REMAINING PRECONDITIONS FOR OPEN ACCESS

  23. PSALM HAS ALSO BEEN ABLE TO GATHER MOMENTUM IN PRIVATIZING NPC-IPP CONTRACTS IN LUZON AND VISAYAS PSALM HAS PRIVATIZED 2220 MW OR ~68 % OF NPC-IPP CONTRACTS, WITH CONVERSION OF MALAYA FROM AN IPP-CONTRACT (ROM) TO AN NPC ASSET, ALL REQUIREMENTS FOR OPEN ACCESS ALREADY MET

  24. IMPROVEMENTS IN DEPENDABLE AND AVAILABLE CAPACITES WERE MADE BY PRIVATE COMPANIES WHO TOOK OPERATED POORLY MAINTAINED NPC PLANTS SOURCES OF SUPPLY IMPROVEMENT: PANTABANGAN-MASIWAY, MAGAT, AMBUKLAO-BINGA AND MASINLOC

  25. IN 2006, THE PLAYING FIELD WAS CLEARLY DOMINATED BY NPC, CONTROLLING ~82% OR 12,491 MW OF THE TOTAL INSTALLED CAPACITY 82% 25% NATIONAL MARKET SHARE CAP Source: ERC Res. No. 53, Series of 2006 National Market Share Cap – 3, 808 MW

  26. BUT BY 2010, THE PLAYING FIELD HAS IMPROVED SIGNIFICANTLY WITH MORE PRIVATE PLAYERS COMPETING IN THE MARKET 25% NATIONAL MARKET SHARE CAP Source: Derived from ERC Res. No. 4, Series of 2010 National Market Share Cap – 3, 648 MW

  27. Average Peak Prices Average Prices CURRENT WESM PRICES REFLECT TRUE SUPPLY-DEMAND SITUATION WESM WEEKLY AVERAGE PRICES (JANUARY 1, 2009 TO JANUARY 31, 2011) Baseload Plant Outages (Masinloc, Calaca, Sual) Drop in demand due to colder temperature and holiday season High WESM prices due to tight supply caused by: (1) Malampaya outage; (2) DOE mandated Power Plants to conduct maintenance before May elections, (3) Prolonged El Nino lowered hydro power generation Lower prices with normalized supply in the grid Lower Demand due to Cold Season and Extended Holidays Lower prices due to “Limay Must-Run” situation Source: Philippine Electricity Market Corporation

  28. FULL IMPLEMENTION OF EPIRA SHOULD BE PURSUED BEFORE ANY AMENDMENTS ARE CONTEMPLATED AND EFFECTED. THE INDUSTRY SHOULD ADDRESS OPERATIONAL ISSUES FACED IN THIS TRANSITION: • Creation of Independent Market Operator and Independent System Operator • Stable Policy Framework – Real Property Tax and Local Government Assessments • Industry’s “Readiness” for Open Access • Public Ownership of Generators (e.g. Masinloc) – non coverage of limited partnership • ERC ruling on TOU pricing specific to GRAM and ICERA applications • ERC assistance on VAT issue on BIR • ERC’s issuance of final approval of Power Supply Agreements • WESM Mindanao commercial operations – AgusPulangi Privatization

  29. END OF PRESENTATION THANK YOU!!!

  30. SUPPORT SLIDES

  31. GENERATION MIX: LUZON, VISAYAS AND MINDANAO

  32. MARCH 16, 2010 ALTHOUGH 2011 IS FORECASTED TO BE A WET YEAR, MINDANAO IS STILL MORE VULNERABLE TO CLIMATE AND WEATHER PATTERNS DUE TO ITS HIGH DEPENDENCE ON HYDRO POWER 423MW DEFICIT PEAK DEMAND: 1,457 MW TOTAL 1,698 MW 1,034 MW

More Related