Luzon and Visayas grids are having a race against time when it comes to capacity additions – that is if the country has to seriously avoid the dire consequences of threatening power crisis into these two major power grids.

The Philippine Independent Power Producers Association Inc. (PIPPA) primarily stated that “additional capacities are needed,” although it qualified that fresh capital flow will only be concretized if these are “supported by policies conducive and fair to capital-intensive investments.”

The organization of the power firms thus pleaded that “the current regulatory framework relating to merchant plants, government approvals, price caps, and the reserve market may be enhanced to allow economically feasible operations by investors.”

Atty Anne Montelibano, president and executive director of PIPPA, expounded that “all kinds of power capacities are needed – baseload, mid-merit and peaking,” although she stressed that “peaking is most needed – especially during summer when the demand surges.”

When asked if the government’s preference for renewable energy (RE) on new capacities would suffice, Montelibano said the “focus is not on the technology, but we really need a lot of generators to build and invest,” stressing that “the capacities being built have to be more than the increase in demand.

She reiterated that the recent declarations of red and yellow alerts in Luzon and Visayas grids by system operator National Grid Corporation of the Philippines (NGCP) “are saying that we need more power plants to cope with the demand. Preparation is key.”

At this stage, the PIPPA executive asserted that “we need our current regulatory framework to improve – more investor friendly and must render faster approvals.”

It is worth noting that PIPPA has a pending petition with the Energy Regulatory Commission (ERC) for the proposed scrapping of the secondary price cap of P6.245 per kilowatt hour (kWh), which is recurrently imposed at the Wholesale Electricity Spot Market (WESM) when there are  price spikes that have been breaching the prescribed thresholds.

Further, the organization is batting for a ditch of the maintenance outage caps being enforced across various technologies – and that shall be incorporated as part of the amended rules on reliability indices for power plant operations in the electricity sector.

The ERC has also recently stopped settlements for the reserve market at the WESM – that was due to notable spikes in the cost of that supply pie needed in reliably operating the entire power system; but it had been the power generators which bore the brunt of that regulatory action.

On the strained power supply that has been throwing Luzon and Visayas grids into breaking points since last week, PIPPA indicated that “majority of the 19 power plants in the Luzon grid on outage are hydro plants, which outages can occur during summer when water levels are low.”

The group specified that the “member-generators have submitted the reports required in instances of unplanned outage and continue to prioritize efforts in further strengthening the resilience of their generation assets.”