The government wants to return as an energy producer to avert blackouts in the future by operating its own power plant in times of supply shortages, Energy Secretary Carlos Jericho Petilla said over the weekend.
Petilla said the Energy Department proposed new amendments to the Electric Power Industry Reform Act of 2001 to allow the government to produce electricity again to ensure energy security.
Petilla told reporters the government should prepare for any unexpected increase in power demand, which might overtake the supply of electricity in the future.
“What I’m saying is, during the time of shortage because there are plants that are being built but not in the years that we may want...So you may have a [supply] gap every now and then,” Petilla said.
He said the government should be prepared for such scenario and run its own power facility during times of electricity shortages.
“The government can run its power plant during times of curtailment or shortage. Even for six months, 1 to 2 hours a day during peak hours, we can run it. Once the other plants are available, we can stop running it. It can be an asset that we can build,” Petilla said.
Petilla conceded the proposed power plant “will be the most expensive power plant” owned by government, “because when there is excess power supply, it will not operate.”
Petilla said the construction of a new power plant or operating the existing unprivatized power assets would result in subsidies, which could run in billion pesos annually.
“Can you imagine for six months you have no power for one day? How much will your losses be? It could be more than P1 billion. This is an energy security asset because the government does not have one now,” he said.
He said the power facility could be a diesel plant because it can be shut down easily when not needed.
Petilla said the Epira law prevents the government from building or operating a power plant.
The law states that state-owned National Power Corp. might generate and sell electricity only from the undisposed generating assets and independent power producer contracts of Power Sector Assets and Liabilities Management Corp. Napocor should not incur any new obligations to purchase power through bilateral contracts with generation companies or other suppliers.
“Change the law to allow energy security asset. We are proposing it...There is a study on changes in the Epira being conducted by the ADB [Asian Development Bank],” Petilla said.
He said the ADB study was being reviewed and would be used to draft a bill for the Epira amendments.
“I told ADB by first quarter of next year that should be finished and ready for filing,” he said.
The government indefinitely put on hold the privatization of the 630-megawatt Malaya diesel plant. But Petilla said PSALM should comply with the privatization of the assets under the law.
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