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Thanks, Mell. I’d like to see more bloggers talking about energy too so I can point to them and create some discussion.
Yours is the 64 thousand dollar question. No simple answers. It’s not only a Philippine problem – similar things are happening in California, for example.
I’m moving toward the opinion, however, that not a single peso should be invested on energy in the Philippines that doesn’t actually “lower” the price.
Not provide a promise of lower costs in the future at the expense of higher short-term costs or provide some general theoretical basis for lower costs, but actually lowers it today. Not enough focus on that.
I think I’ll try to test that theory as we go along in the new year and see how it plays out.
this isn’t the outfit I was referring to, although I know the owners of SHemberg too. The cocoshell boiler I referred to was the one of Pro-foods international.
I’ve made numerous changes and additions to the DOE data from a number of other sources, so this database has morphed into a stand-alone dataset unrelated to any specific single source.
Thanks for the link Nick. Yep you guessed correctly, I am based in Houston, Texas US. I started with UtiliPoint in February, and am using the blog as a way to communicate with members of the ETRM community. I’m finding it to be a tremndous tool, and I wrote a piece in UtiliPoint’s Issue Alert about how companies need to take blogs seriously here: http://etrmcommunity.com/site/modules/wordpress/2006/04/03/whos-talking-about-you/
Just to clarify, FeedBlitz totally honors its readers privacy. The difference is that we do permit readers’ email addresses to be shared with the publisher – we make this clear on the signup pages and in the FAQ and in the privacy policy. Readers can also register with FeedBlitz anonymously if they wish. It seems to us that if you want to have your reader hand out their email address for your content, it is reasonable to share their address with you. What you do with that information is up to you, but it isn’t a privacy issue.
Phil – You are absolutely right. This isn’t necessarily a privacy issue nor a weakness with Feedblitz. It depends on what one wants or is looking for. Some would consider the Squeet approach a weakness.
I’ll change the wording on my post. Thanks for stopping by.
Like Neal Cruz, I also believe that it’s PSALM who’s the greedy here ogre here, not First Gas.
YNN’s bid $561.74 million, i believe is a gross estimation blunder on the YNN’s part. Perhaps the 56174 numerals came out of a feng shui divination, that’s why they bet on it with all the shirts on their back.
What I pity here is Meralco, which is again being “used” (negative connotation) by the government. (Remember how the goverment of FVR used Meralco to make the Malampaya gas fields viable? Now the government is arm-twisting Meralco to make it appear that privatization is going somewhere.) How can Meralco refuse when the government holds all the cards?
Oh well … as they say: “only in the Philippines”.
Good to see others see the blogosphere as as big influencers on Milberg Weiss and on other matters. There’s already 21 posts regarding Milberg Weiss up on the blogosphere this morning.
Paul Krugman also pointed out how the power suppliers in California colluded to cause artificial shortages which would result in raising the price of electricity.
I agree that the real role of WESM and its participants should be clarified. I have found that many supposedly knowledgeable people carry serious misconceptions about the upcoming market.
For example, according to Mr. Wallance, “[O]nce full open access is in place, a company that consumes one megawatt or more at peak load, for instance, may go to the market and bid for power.” This is not true. When WESM starts, only generators will actually provide bids of price and quantity. The buyers (distributors and, eventually, qualified end-users) will only submit their expected hourly load. Buyers from the WESM will be price-takers, who will have to pay whatever price is determined through WESM. There is very little buyers can do in the market.
I too am glad that both PSALM and ERC have published their responses. However, I do not share your opinion about Cruz and Banal. They are bad and dull writers and like most local columnists think they know it all. Also, they are very often paid hacks.
Yes, they might be running at that low Capacity factor because Mirant Sual Plant is used as an Spinning Reserve. Meaning, as a reserve, most of the time, only a part of its rated capacity is actually utilized. However, as an NPC-IPP they are paid for 1000 MW capacity or 83.33% of its rated capacity.
Summer, eh? ERC, WESM, and PEMC recently formed a tripartite committee to implement mitigation measures against price spikes and volatility. There’s a proposal to set an offer price cap at P62 per kWh. If I understand what you’re saying, we won’t really know if there’s something really wrong until next year, that is, when the tripartite committee’s life has ended and while we’re all busy with elections. Interesting …
P62/kWh? Just as a data point for reference – in California, anything over P13/kWh ($250/MWh) is considered a “price spike” and they have a “soft cap” set at about P21/kWh ($400/MWh).
I can’t imagine a P62 limit coming into play this year.
It seems to me that the first eight months or so will be spent with everyone finding their sea legs, seeing how the markets respond to everyday types of contigencies, making sure billing and remittance systems are working, a basic system shake-down.
I agree with your observation that transmission issues will become more apparent with the operartion of the Philippine spot market. I believe in the principle that ‘risks should be borne by the one most able to manage it’. Unfortunately, there is NOTHING in the spot market rules that incentivizes TransCo to address line congestions that jack up settlement prices in the market. Buyers in the market will just have to bear the additional congestion costs while they wait for TransCo to move.
Thank you for the appreciation. I’m just a simple employee, doing my little work the best way I can. I can’t make big decisions, that’s the job of the Commission. So when people complain “electricity is so expensive, why can’t ERC reduce the rates?”. Even we joke about it with the Commissioners “Sir/Mam, why don’t you reduce the rates? hehehe”. They just smile and say, “if only we can, we’re paying the same expensive bills you know”. That’s what people forget. We are all consumers. We don’t get discounts in the ERC. Even generator employees don’t get discounts.
Anyway, that’s why I encourage people to ask, seek answers to their questions, rather than blame the government for everything. Information can enlighten you, and eventually help you figure out how you can help the country. Try seeing the bigger picture.
So, a potential investor in generation assets in the Philippines would now have three choices:
1. Build a new plant
2. Buy an NPC plant
3. Buy Mirant’s plants
If the law of supply & demand still works, given one less investor (lower demand) and the addition of plants for sale (increased supply), then the prices to be offered for NPC’s plants would fall, or not be nearly as high as currently expected.
It’s blocked again…I guess I was just early that time that the MIS hasn’t activated the “wall” yet. But everything here’s blocked, even yahoogroups. So I can’t access my egroup’s files, which by the way, is important for my masters subjects (our profs use egroups for announcements and posting files and homework)..but oh well, my studies are none of ERC’s business so… just have to access my “unnecessary” websites outside. It’s ok, I just hope our office generate some savings for this, so we’ll have some bonus this Christmas..I wish!!!
Aha. That’s a very good question. “Performance” can mean different things to different people. Also “working” can mean different things.
I was taking a simplistic view of performance – i.e. what have the prices been, has there been congestion.
PEMC actually makes some attempt – although there’s no transparency to their calculations – at puclicly tracking certain “market competitiveness” indices. They publish Market Monitoring Indices Reports here. The Weekly report is more interesting than the Daily. In here they include, HHI, RSI, and PSI measures.
But in the end, we still have to rely on “independent audits” of WESM to tell us if they are appropriately translating bids into market prices and dispatch instructions.
It will be interesting to see what kind of reports the Market Surveillance Committee comes out with also – assuming they will be able to speak publicly without being censored. I’m just not up to speed on the governance issues and mechanisms – BUT IT’S IMPORTANT.
More competition for investors’ dollars. I guess this means that PSALM will not get anywhere near the same price YNN offered for Masinloc, which is supposed to be back on the auction block.
Again, thanks for pointing us to the reports page. Very interesting, such as the one that shows First Gas Sta Rita as the “pivotal plant”. If I were Meralco, does this mean that I should tell Sta Rita to be always available (because if they don’t generate, spot market prices are likely to shoot up)?
oh well, what do you expect from pete ilagan? sensible ideas? ha ha. it’s like expecting honesty from politicians.
anyway, my theory is that this latest gimmick of pete is actually coming from npc, which is always looking for every opportunity to malign meralco’s ipps. pete is just being used as a dummy spokesperson.
it’s good that there are people like you who really understand the not-so-simple nature of such price comparison.
thanks a lot for giving your “corrective” opinion. I just hope the erc gets to read it.
have a nice day sir.
I am a residential customer of Meralco, a consumer. Contrary to Mr. Marcelo’s judgement (who I think is from Meralco) of NASECORE’s request from ERC, I believe it is pro-consumer. Obviously, Mr Marcelo is not aware of consumer complaints regarding Meralco’s violation for not sourcing the lowest cost of electricity which is mandated under their franchise and EPIRA.
And if Mr Ilagan is the spokesperson of NPC then why was NASECORE an oppositor to NPC’s petition for rate increase which it even raised to the Court of Appeals? Is this hard to understand for Mr. Marcelo who must be handling Meralco’s PR? KUDOS TO NASECORE.
Noli – no need to “hope.” Here’s a list of emails at the ERC – forward away.
Mia – I agree we need more of what Pete is doing – offering up alternative ideas for discussion and debate, with a consumer focus. Meralco, admittedly, does some of that, but they can’t do it aggressively; they are conflicted.
According to Meralco’s Annual Report for 2000, their capital expenditures for 1999 and 2000 were P6.53B and P5.39B, respectively. (I guess that’s in terms of 1999 and 2000 pesos.)
I stumbled upon your blog accidentally today and I was quite impressed with the amount of info you’ve accumulated on the Philippine power sector. I was also quite interested in the database you compiled on all the grid-connected plants in the country. A couple of years ago I compiled a similar list but limited it only to the power plants that NPC was privatizing- although my main objective was to keep track of the privatization schedule, who was buying which plants and for how much, etc. Needless to say I haven’t updated it since Dec 2004 as no plants had been sold since then. In any case, your excel file is way better and more detailed than mine. I downloaded it and I’ll see what I can add, if any, although it seems you’ve really covered all the bases.
On a related note, I think Google has a new spreadsheet program out which could be the solution you need to make this database publicly editable.
Excellent. Thanks – all input is welcome. And I’m sure others will welcome it too.
I’ve been looking at Google Spreadsheets. From what I can tell, I have to actually send an invite to an email address before they can edit it. But I suppose that is do-able. I’d rather have an open wiki-style where people donn’t need to seek my permission and we could just revert the trash.
I’m going to take another swag at Google Spreadsheets, though. I have some time today.
Good call on EditGrid Nick. It does seem to be much better than Google Spreadsheets. I see you also added a WESM price spreadsheet there. The power plant database already looks to be pretty comprehensive, though. I can’t think of anything to add to it at the moment, but I’ll definitely get back to it from time to time.
I’m still surprised that someone actually put up a blog about the Philippine power sector. Your website is a terrific resource for people involved in the power sector as well as for those who are just plain interested in it. Keep it up!
I think I understand the need for a forwards market. However, I do not understand the value of a capacity market. Will this also be a spot market? What value would it bring to the industry?
Capacity markets only makes sense if there is a regulatory obligation to meet Resource Adequacy requirements. It would be a forward market in capacity – not a spot market.
For example in California, the CPUC imposed a new regulation saying that by October of each year, the IOU’s had to demonstrate that they had enough capacity (identifiable real plants) under contract for the following Summer months to meet 95% of their anticipated Summer demand and they have to have 100% under contract on a month-ahead basis. traditional Forward contracts are energy only – there’s no plant backing it up and so they don’t count.
So a capacity market will facilitate the trading of short-term capacity so that utilities can balance their requirements on a short term basis (i.e. if their demands don’t develop, they have a way to unload capacity they may have pre-purchased, and vice versa).
Anyway, capacity markets go hand in had with Resource Adequacy requirements – which we don’t have yet in the Philippines.
Here’s an older post. Not much there; I’ll try to write more on it.
People actually get surprised when I tell them that I have a Mech Engineering degree, they presume I’m an IT grad because I work in the IT field…*snicker*… Thanks for the link love
Yeah, I thought that was pretty cool too. I don’t know why I can’t find Ilijan – maybe the satellite photos on that side of the bay are older and it’s just not there.
I do not know what costs go into transmission tariffs in California, but here in the Philippines, TransCo’s current rates include not just wheeling charges, but also ancillary charges. It has been said that the latter are more properly classified as generation instead of transmission. I think that ancillary charges account for about half of TransCo’s rates.
The four representatives from DU’s will come from both investor-owned and member-owned entities. Right now, I think that the four are divided equally between investor-owned DU’s and cooperatives.
This story seems to be right up your alley Nick. I’m still waiting for your definitive take on the price manipulation issue. For that matter though, do you think we shouldn’t have gone ahead with starting the operation of the WESM while so little of NPC generation has been privatized?
OK, my 2 cents worth, that make take off onto some tangents.
I don’t have a particular problem running the spot market prior to full privatizaton as long as the rules and procedures appropriately reflect the state of the market and its competitiveness. And that may indeed be where we are.
I expected the market to have run-ups; but I thought the participants would have at least waited till they had a more publicly understandable “excuse” to run it up. But I’m just cynical enough to believe that what is happening could have a specific and calculated purpose.
As a side note: The existing IPPs are not merchant plants. Their profits are governed, generally, by existing bilateral contracts – and quite frankly as far as the existing plants are concerned, the owners probably don’t care whether WESM is even around, much less competitive.
I do believe, however, that the spot market provides opportunities for these to create additional value – but their contracts may prevent both the owners and the off-takers from tapping that value. That’s a waste (and overall economic loss to ratepayers) – if there’s value there, the parties should find a way to tap into it.
The only real merchants in the market are PSALM plants. They are currently unhedged. There are three ways the government can hedge their investment in those assets: Transition supply contracts, sale, or revert to rate base recovery.
All three of these ultimately impact ratepayers or taxpayers.
I think we should also incorporate accuracy to transparency. DOE, for example, is trying to show transparency by publishing data on their website. However, base from experience, these data is not that accurate as it should.
That’s an excellent point, Alfie. I’ve heard comments in the industry regarding the credibility (or reliability) of Napocor’s historical annual load data, for example.
But the more data you put out there, the more difficult it becomes to dissemble – since discrepancies start to show up when relating one piece of data to another.
Meralco has a take or pay contract with its IPP, and its IPP also has a take or pay contract for fuel with the natural gas consortium. The IPP thus bids zero because it virtually has no avoidable cost. I remember talking about this with Meralco people and was informed there was some limited fuel bankability. Just taking advantage of this would be beneficial to the economy as a whole but not immediately to Meralco consumers. I’ve pondered this problem before the spot market opened.
Good point. I had forgotten about the fuel Malampaya fuel issue – which is somewhat unique. But that applies only to Sta. Rita and San Lorenzo, not QPL of course.
Congratulations on the anniversary Nick! Over the past year this website of yours has been an important source of information for me in my work. Cheers!
Well, now that we had an 8 hour brownout again this weekend and now that I found out it was because of a Transco maintenance activity, this is now making sense.
These outages are probably related to Transco maintenance and Transco is trying to schedule the outage to be as less disruptive as possible on retail customers – thus the “odd” times. Odd meaning – not coming at peak supply times when deficient supply or facility overload outages usually occur.
Let the market work! Have prices reflect the tight supply to get those oil-fired peakers in-the-money. Then there’d be less need for all these government “begging” nor it’s dancing for rain.
Hehe. Yep. But more to the point, the DOE – or rather ERC – can have a pro-active role here. The ERC, with DOE backing, should see to it that the utilities actually implement a program to procure power during such emergencies from embedded, private generators. DOE public appeals can actually have an effect and therefore a role – but they should complement economic programs – programs that, after all, actually do have a public interest.
Sounds easy to implement but injecting those precious MW to the system is not a simple process. These embedded plants should at least be a registered member of the WESM,with WESM compliant meters, followed all technical requirements, no problemo with “synchronization”, and have a direct link to the grid.
eDOE – But wait, the Secretary just asked for them to inject those precious MW into the system. The issue of synchronization, technical requirements, grid connection – or WESM registration – didn’t even come up in his appeal. So it must be possible to do already.
I don’t want to play down the administrative requirements of metering and remittances, but I’m just suggesting that a program be put in place to “pay” them to generate or alternatively take load off the system during grid shortages – and make it as simple as possible.
I think the prices of energy nowadays are more competitive than before. With the establishment of the WESM, distribution utilities have now an option where to procure their energies, i.e., from the WESM or NPC or owned-IPP.
It is a fact that WESM prices are fluctuating. Some intervals have prices that are below the existing TOU rates, while there are intervals that reflect very much higher prices than the TOU benchmark. Hence, a well-executed BCQ declaration could enable a DU to take advantage of the lower prices and get rid off high market prices.
However, it is quite frustrating the some DUs do not want to exercise their privileges and rather leave their fate to NPC, which is currently trading on behalf of those DUs that are indirect WESM participants.
But it is quite more frustrating that NPC does not allow DUs to exercise their right to declare BCQs after the fact, which was in accordance with the WESM Rule.
NPC always argued that such would result to cherry-picking. It’s true! However, NPC does not realize that whether DUs cherry-picked or not, the energies that they declare in the market as BCQ are already committed, which means regardless of how high or low prices in the WESM are the DU would still be paying the same TOU rate for the corresponding intervals where they chose to declare their BCQs lest they’ll be charged at higher market rates.
In so doing, cherry-picking is just aimed to avoid being charged with higher market rates vis-a-vis TOU rates.
sure its a great thing. the trouble is, it will have to go through the ERC and the meralco board (which is manned by some government officials). this will fall under new operating expenses, something that rarely get approval. if this is, say a repair of a pole, this is approved as of yesterday. but new projects that need new equipment? dont hold your breath. new equipment means new rate base which also means new rate increases, etc etc.
I think i’ll disagree with you on this one. Why the Disco’s? As provider of last resort, they have no incentive to change their purchasing/pricing behaviour… unless they start losing their customer base and are forced to compete for them. I agree something has to happen on the demand side but i don’t think we can expect that to come from the Disco’s themselves. When are Globe, Smart, etc. going to enter the ESP business? Or maybe it’s time for a ‘myPinoyEnergy’ startup?
power prices are lower in mindanao because the prices in luzon subsidize them. so as to make mindanao more enticing to investors and make luzon less congested.
if EPIRA or Open Access is here today, we shall see if this is still true.
generation charge – the cost of power from napocor
transmission charge – cost of power being brought from napocor generators to distribution utilities (like meralco)
system loss charge – an ERC scheme where power losses due to technical (power dissipated by power lines and transformers) and nontechnical (pilferage, etc) are billed to the consumer.
Distribution – charges for bringing power from transco to your homes. also for metering (reading and supplying meters),
lifeline discount – subsidized cost for power up to 100 kWHr
VAT – I think you know them
missionary – so that power can be made available to unprofitable islands in the philippines
Just to be clear here, when I talk above about the demand-side, I’m referring to the market demand for what the IPPs are suppling. And I grant that Disco’s aren’t the only ones. Large industrials with “access” can compete for IPP power too – but they are tiny compared to what the Disco’s purchase.
Ah incentive! Yes, I didn’t address whether the Disco’s have incentive. I just made a point that they are the ones that can drive pricing down. Whether they have incentive to do that is indeed an issue. If the Disco’s want incentive, I’m sure the ERC can oblige. I believe there are indeed incentives beyond regulatory fiat.
In the words of Jonathan Macey, we have the “enabling” rules (unregulated pricing for power production). Maybe we now need “mandatory” rules to force the Disco’s to procure and procure competitively – this is exactly what has happened over the past five years in California.
Robbie – nice. A nice start, anyway. Maybe Meralco can get you to write something like this for printing on the back of the bill! Or for their website.
As of this moment, there is no “tangible incentives” whatsoever for the Discos for procuring efficiently. Perhaps this is one reason why they are not looking into opportunities in the WESM (which is currently the only available facility that provides opportunities to lower down generation costs).
Nonetheless, there is the pending new AGRA that would provide incentives for Discos, once implemented, by having them kept as much as 50% of the savings from effecient energy purchasing. But in case the procuring rate is above the regulated benchmark, then the difference would be absorbed by the Discos as losses.
But looking into another perspective, there are “intangible gains” that Discos could get in lowering down generation rates. One, is liquidity – the lower their costs, the more they beef up their cash reserves. Two, maintaining lower cost would make them attractive to contestable markets once open access begins. Three, lower cost might be perceived as good customer service by the the captive markets.
It seems there is going to be a significant amount of energy used at the new Google complex. I wish I had a small fraction of that bandwidth available here in Davao.
I wish I had some of the enery too but thats wishful thinking.
I was apprehended not too long ago by Pasig traffic police who offered to let me off for some consideration for an illegal u turn. I declined, but then had to spend four hours to get my license back.
We wanted to determine which area/province has the low electric rates because we intend to set up a small footwear factory? Please advise where can we get information.
Leah, well that’s interesting. You’ll probably want to look at the Commercial Rates (as opposed to Residential) and it may depend on the size of your electricity usage.
However, I think I have a file that has all the “average” rates for each of the electric cooperatives for 2006. You can scan through and find the lower ones. Send me your email. But that file won’t include the private utilities that serve areas like Davao City, Cebu City, Cagayan de Oro, Tarlac and several others.
The lowest rates overall will generally be in Mindanao. Are you looking at Luzon specifically?
Leah, go to my Wiki page here and download the Financial & Statistical Summary excel worksheet file. One of the far right columns is “Average System Rate” – which is the average price of power from the EC. It’s just an indicator of price levels – but it’ll give you a place to start shopping from.
If you have problems with that file or need it in another format like pdf, go to the list of data files here, find the “2006 fin and stat summary” and download it in whatever format you want.
Hi John. Go to the link in the post above and click on the “2006 Existing PP” tab at the bottom of the page. That’s the official DOE list of power plants.
Got here by following you on twitter. That’s a whole lot of power. Probably sabotaged. Happens here all the time. By the way, this is the first blog I’ve seen that uses OpenID for commenting. Interesting! Cheers.
Thanks, Dennison. Are you still getting sql errors in commenting on the blog here. Your comment seemed to get thru ok. I’m posting this comment also as a test for myself.
Yeah. I’m now having problems now too. It’s redirecting to my openid provider, trying to process the request, but not doing it successfully. I’ll work on it – if I can’t solve it, I’ll pull the plug on it, unfortunately.
Bambi Capulong of Transco says it was a “technical glitch” occurring at 1:04 pm on a Sunday afternoon that caused caused 90% of the whole Transco/Napocor Mindanao power grid to collapse. But if it was indeed a “glitch” – and they could certainly tell if it was a glitch or not because it is standard operating procedure to have in each and every Transco substation a “glitch detector” that “measures any false or spurious electronic signal that may be caused by a brief, unwanted surge of electric power” and turns on a red light on the panel. So all they have to do is see if that red light is on or not – if it was indeed a glitch then there were other things going on at time that compounded the immediate impact of the glitch. The system is designed to withstand a single contingency – if a relay fails due to a glitch, then the system should remain stable even if a single circuit is tripped. But if other conditions are also not normal, then the failure can cascade – that is probably what happened. But Transco is not disclosing what the other conditions were that contributed to the cascade.
Mindanews reports that Emmanuel Abellanosa, Transco Assistant Vice President for Mindanao, says the cause of the problem was a conductor “flashover” (somehow related to an insulator, it seems) in the switchyard of Agus 6 Hydroelectric Power Plant in Iligan City.
A flashover is not a glitch.
The fact that a “flashover” occurred is one thing – it’s a matter for the Transco engineers and maintenance crews to address. But the fact that a “flashover” took down 90% of the Mindanao grid is a matter of public concern (we’re paying, afterall, for every peso Transco spends and invests). It may be that a “cure” for that situation is hugely expensive and we all might just agree that we take the risk of recurrence. But the conversation isn’t engaged. We have no knowledge. We have no venue for input. That’s the type of environment that a “public utility” should think about changing.
I don’t know if it would make a difference in your calculations (I’m too lazy to download the spreadsheet) but I believe the EPIRA calls for a 25-year concession award with the option for another 25-year extension after a performance review.
You know, pturingan, I think you’re right. I’m not sure why I was thinking 10 years. It will make a difference – driving the price down. I’ll try to take another look.
I don’t hide nor run. My unsolicited analysis should be in Would, but Blogger is making that impossible at this time. My political beliefs—past and present— are public, even to the bilaterals and multilaterals who want my services (including the ADB) and they have never confronted me on these.
Thanks, Manny. It’s nice to see a webpage on Dorelco too.
There is going to be a large focus on EC issues on this site over the next few months. Let me know what I can put or discuss here that is helpful to the ECs.
It was good PSALM finally decided to let the press into the bids opening, rather belatedly. As of Monday afternoon, Charo Logarta told me she was considering submitting a petition on PSALM transparency though others in the energy beat were not receptive. Later in the evening however, Business Nightly on ANC announced the PSALM change of heart.
What’s not been discussed so much in regard to the Transco valuation is the regulatory regime, as any perceived inconsistencies would tend to drive valuations down.
Good point, Viking, about the regulatory regime. I’ve got to believe this is one of the biggest uncertainties the concessionaire faces. Here in the Philippines, it’s basically the same as sovereign risk or political risk.
There’s a couple of ways the bidders handle this uncertainty. They can include various risk-weighted scenarios on the revenue levels or they can just up the discount rate – kind of a rough justice way to handle that uncertainty. Either way, it drives valuations down.
i agree with the two reasons that alfie brought up. congestion has always been a reason for our systems inability to utlize far but low cost plants. as far as i see, transco has always tried to alleviate the constraint problem through transmission projects. as mandated in the pgc, the SO must operate with n-1, theoretically meaning that no constraint will ever take place. the system at this point is not compliant with this. the problem is that upgrading the system to meet this would have drastic impact in the rate. however, this goal is also a moving target. its a matter of weighing which solution to pursue,. it could be a combination of generation and transmission but how much of each? a deeper cost benefit analysis is required to decide wisely.
hi Nick, a million thanks for dropping by at my blog, i find your Asian Energy Advisors very interesting to note having that niche of information and analysis about energy resource management.
i added you to my blogroll, so that i can get in touch with your blog anytime i’m online
Like the title of your post ‘ Can you stop a runaway story?’ And you’re right about situations like Philippine electric utilities and other companies who have no effective Internet presence to stem the tide of a story unless they’re blogging. With out a blog they have not a voice and no way to engage in the conversation going south on them.
I was informed and invited only late Friday morning. Didn’t really know what the agenda was – or what Alex had to do with lighting currently. Turned out to be more meaningful that I anticipated. Bad foresight.
I presume you mean the crisis in South Africa? Well, like it or not, no one else can do it but the government and they have to step up and take charge. It’s politically dicey. Gray Davis, the Gov. of California didn’t survive even though he put in place structures and programs to dig California out of the mess. The legislature did a lot of heavy lifting too.
Oh, yeah – get some effective consultants advising the government that can effectively work behind the scenes. Avoid the bullshitters.
Have you checked out the EPIRA amendments passed in the House of Reps? Any comments on their proposals to accelerate the implementation of open access by reducing the privatization threshold for generation plants and IPPAs to 50% from 70%? A number of people I talk to believe that this won’t be a good thing because it still leaves Napocor- and PSALM-owned plants with too much power in the market. I believe the Senate version of the bill might adopt a similar provision as well although that remains to be seen.
pturingan: Ay. You’ve got to ask somebody with a PhD in economics. It’s my understanding you’re not likely to get a competitive market with less than 70% of the assets privatized – and there’s a bunch of other conditions. I’m not an expert in this issue. But the 70% was not set arbitrarily.
It’s all flawed. You don’t need an economics degree to understand the conditions (heck, someone up there has an economics degree, and look what that person is lobbying for?) Ooops. That’s all I can say for now. (This is my personal opinion)
Well, he’s playing it safe. Anyway, there’s a way to speed up open access, but there’s no promise of competition. The choices are limited, and prices are still regulated. Better wait and enjoy the full benefits. Patience is a virtue, hehe.
Yes to PEZA open access, but no to PEZA as energy regulator. There should only be one regulator for the power sector, and that is the ERC, so as not to complicate matters.
Elrakal – Re single regulator: I’m definitely not arguing for PEZA’s case in this instance. My knee-jerk reaction to PEZA’s preemption of ERC regulation is that it’s a bad idea – but I haven’t looked into it in detail. In general, I’m less concerned about multiple regulatory jurisdictions than I am about bad regulation (however one might care to define the term ‘bad’).
In the U.S. essentially all municipal electric systems (some are very very large) are self-regulated (–> multiple regulators). Almost all, but not all, electric cooperatives are self-regulated. Wholesale tariffs are regulated by an entity (FERC) that is completely separate from the entity (state regulatory commissions) that regulates Retail tariffs – even for the same utility. So having multiple regulatory jurisdictions is not an unusual concept, in and of itself.
I’ve seen a report by the Brattle Group dated Sept 2007. It was prepared for the Edison Foundation and it appears mainly for the US market. I couldn’t find any reference to the Philippines. Are there any other references for $/kw for the Philippine market/
interesting! I sure wish we could do that too. But as of now, we have this policy on who can only give “official statements”, and we sure don’t want to be “quoted”, you know how malicious Filipinos can be. Sad but true. But I sure would love to write about the work we do. I am planning to do that when I’m no longer connected to the company. Not sure when that will be… it’s as uncertain as privatization. Hehehe…
i think this is the purpose of Grid Management Committee (GMC)and Distribution Management Committee (DMC). As far as i know, Nasecore is represented in the DMC. So are other industry stakeholders such as meralco, transco, ec’s and du’s.
hrt – I agree the GMC and DMC are designed to provide input from a consumer perspective. And I believe these Committees are sometimes active in PubCons and providing input on rule-makings. But consumer representatives are a minority on these committees, are they not? So the Committee itself, when it presents advisory input on policy issues, could squelch the consumer’s perspective or at least mitigate that perspective in deference to other interests on those Committees. And I’m not aware they’ve ever participated in a rate proceeding (though I could be wrong on that).
An entity that is entitled to be a full-blown intervenor in a rate case, focused solely on consumer issues, can be a powerful consumer lever before the ERC if adequately financed so that they can bring to the proceedings expertise equivalent to that of the utilities. Intervenors are always at an disadvantage in a rate proceeding – the utility holds many of the the cards (but not all).
Hello, I saw you there, see you again next week. Hope to chat with you then. You were rushing last time eh. This “area” is what I’m directly working on, fyi.
Ha ha. I was going to leave a post on your blog and say the same thing. Saw you – took me a couple of times for it to register – but you looked busy and all I could think of was “Zahflo”.
I’ll try to catch up with you next time I’m in, Lisa. What floor are you on?
It must very frustrating for a person like you, who’s very analytical and makes a living out of understanding & solving problems, to not fully understand what’s happening to your “digestive track”. I sincerely hope that you get well VERY soon.
Thanks, Larry. Ha. Well, I’m taking clue from Filipino culture and something Sir William Osler, a Professor of Medicine at Oxford said around the turn of the last century – “live in day-tight compartments.” Analyzing the entire past and the entire future can throw us analytical types into loops – whether it be energy or health.
Notwithstanding the biased media that you have read, stockholders have no problems getting info on meralco. It is surprising that the empty posturings of a govt crony seemed to have fooled a lot of people.
Consumers like yours truly can buy meralco stocks – it is openly traded in the market. If that is not consumer ownership, I will never know what it is.
What some people dont realize is that the govt owns NPC, and NPC is in BILLIONS of dollars in debt. The 12% eVAT on power sales is whats keeping NPC in the black.
Heaven forbid should the same thing happen to Meralco. And to be led by a person whose penchant for buying paintings with pensioner’s money is a sure invitation to disaster
Opening the ‘market’ before 70% of NPC privatization is an execise in futility. NPC will continue to dominate the market and dictate prices.
Buyers in WESM may have little to say concerning prices but they have the choice to buy or not. If these consumers opt to use their generators instead of buying from high priced WESM, then market prices are forced to drop or risk becoming obsolete.
Giving NPC (or any single entity) control of the power generation supply will result in artificial prices, either too high (as a result of greed) or too low (election prices)
That’s actually a very good question. It came up on the very first day of Hearings when Pete Ilagan of NASECORE was pursuing this point doggedly in cross-examination of PIPPA President Pantangco. His answer got very confusing. Finally, it was agreed that he would submit a list of members that were presently current with their dues (but some firms or people are considered PIPPA members even if they are not current – i.e. they attend meetings and influence PIPPAs activities).
I never got the list. I tried to furiously write down the names he was verbally reeling off, but I couldn’t keep up.
Notably, AES/Masinloc is not a member.
But most of the NPC BOTs are, the First Gen group, and some of the PEPOA members.
Pantancgo said PIPPA represented 8,800 MW of capacity in Luzon of which 6,200 MW are IPPs of Napocor and 2011 MW are BOOs contracted to Meralco.
At first Pantangco began listing members of the Board, then shifted to listing corporate members. I’ll just list down some that I had scribbled in my notes:
First Gas (Santa Rita and San Lorenzo) First Gen Hydro (Pan/Masiway) Buaung Power (BOT to NPC) Bacani – Kepco Lopez Dee Louis Miguel Aboitiz (Luzon Hydro, East Asia, SNAP) Freddie Puno (Team Energy and San Roque) Santana (Quezon Power) Ramon Abaya (Minergy) CBK Alstrom Group Trans Asia
For purposes of discussion, I will refer to losses as technical and non-technical only and will not include Company Use. Back in 2004, ERC obtained the services of UP Engineering for the Segregation of Distribution System Losses. ERC wanted a professional help in determining which part of the losses is due to technical and non-technical (ie. pilferage) losses. The purpose was to benchmark the different DU's and EC's on the matter and somehow reduce the caps further and force the otherwise poor performing utilities to improve their efficiency. ERB Record would show that utilities did improve their performance after RA 7832. They used to have losses as much as 20 plus percent and all this were passed on to the customer. Now, i think only a few utility has a systems loss higher than 14 percent. In fact there are utilities with losses as low as 6 percent. If we compare losses in first world and developed countries one will discover that losses in these countries are only around 5-6%. How come that here in the Philippines and other poor countries, its 10% or more? One conclusion we can have is that the benchmark for pure technical loss is on those figures: 5-6%. The rest is pilferage or nontechnical loss. Aiming at technical losses lower than 5-6% is therefore economicall unviable and I will have to agree with Mr. Aboitiz. Abandon all hope. Unlike technical loss, pilferage can be easily identified and can be corrected at a minimal cost. It is therefore always a profitable exercise. And in many ways, it also lowers the technical loss as well. Back to the study, a simulation softwarewas was developed by UP and was used extensively by ERC to the point that utilities were required to submit actual field data that were inputted to the simulation software. Apparently, there were so many glitches that the last time I heard, the deadline for the submission of the data was again extended for another 3 years. It was previously extended for about a year. The utilities apparently are dragging their feet since whatever the result, it will end up further reduction of caps. The ERC decision of reducing the caps NOW is a welcome development. And only after seeing just raw or initial utlity data. That is a nice shortcut approach.
However, to help utilities curb pilferage, Congress has to amend RA 7832. Right now, it's very difficult to prosecute a violator. Many times, the utility has to use dirty and illegal practices that in the end boomerangs. On company use, ERC records would show that Company Use is benchmarked around 0.25%. My opinion is, that's a good figure to start with as a new company use cap. Many utilities with higher Company Use should be subjected to thorough investigation because it's possible that they manipulate their figures. Its very easy to audit this because Company Use is based on actual Meter consumption. All ERC has to do is to check the record of these meters. And also to check the kinds of load in the facility. I suppose an electric fan cannot use 10,000 kwhrs/month??? But probably they might…in paper. Regardless of where you put Company Use, it will still be charged to the consumer. That's how utility business is run. Unless ERC provides incentive for utilities to lower their office consumption. This is quite long, but I hope this helps.
I don't have a lot of details on the UP Engineering approach to loss segregation and the experience they had with the utilities. But it seems to me that approach has been completely ditched by ERC in their move toward PBR for the DUs and Benchmarking for the ECs. To the best of my knowledge the UP approach is not being used at all in these two new rate methodologies. Or is it? It does sound like it was data intensive – and that in itself is problematic.
Your figure for developed-country distribution technical losses of 5-6% sounds about right to me and may be a good target. But, for many rural utilities here that I've seen, that won't come without a huge investment – they run secondaries way too far (need more primary and transformers), have really bad connections (high resistance), and need more delivery points (substations) and a bunch of other stuff.
So part of the solution is to get the capital available, make sure those lending can judiciously evaluate the return opportunity of the investment, get the procurement practices elevated so that quality material is used, get the engineering and construction practices up to snuff so that that projects are designed and installed correctly, and make sure the ECs are able to get adequate rate recognition (and recovery) for the investments. Everything is linked together and it all needs to work to get the technical losses down. It's not simple.
On pilferage – I think that is a more complicated issue, that has deeply embedded and multi-faceted social aspects. Maybe it doesn't require investment, but it will probably require additional operating expenditures.
On own-use, I agree with you. And this is something that's best handled through audits. And the ERC should be doing that.
Right, they did ditch the proposed program and the PBR and the benchmarking provides new rules to the ballgame. The consolation was, they were able to get enough data for them to make their latest decision on the cap. Hence, for me, 8% for DU's and 11% for EC's is a good starting point with 6% and 9% as ideal targets for DU's and EC's respectively with the 2% tolerance to pilferage. The point is, we have to push the utilities to be responsive to the times and be more creative rather than just pass their inutility to the customers in terms of higher cost of power.
Mr. Aboitiz and Head Wind Canoe spoke about systems loss as one entity. That for me brought more confusion. I would agree with both of them if Mr. Aboitiz is referring to the technical while the latter the nontechnical component of systems loss.
I think the best approach for all utilities is to start addressing their non-technical losses before they even begin any plan of correcting their system. In many instances in my experience, overloaded substations, distribution transformers and secondary systems were relieved merely by putting check meters (load center meters) in all strategic points and addressing pilferage head on with preventive metering schemes and all out legal actions. Any sign of weakness, people will be encouraged to pilfer and there is no incentive for them to do it less but only to use more free electricity.
As both MERALCO and VECO admitted, their technical loss is only around 6%, the rest is pilferage. Limiting this to 2% is doable and is the only responsible way of doing it. Several years ago, the system loss myth is prevalent in the utility industry in that nontechnical loss is negligible. With the study on the segregation of system loss and with the international systems loss data being made available, the Philippine utility practitioners soon realized that they have not considered the nontechnical loss for so long in their distribution planning.
Indeed operating expenditures will be higher and sometimes there is a need for political will on the part of the utility to fight pilferage. But I think this is the right approach. Only when we have controlled the pilferage, will we be able to see the true technical loss, and from thereon make the necessary corrections and upgrade depending on the level of performance we want to achieve.
Interesting information, Arnold, about the UP Engineering model work and that the ERC has used it to come up with their proposed new targets. I know a PubCon is being held in Cebu Wednesday on this, I believe. Two weeks ago, while I was working with NRECA, we tried to get meeting with Wally Delmundo to get update briefing on that work but were unable to get meeting coordinated while one of their Washington based advisors was here – so it it didn't happen.
My take is that at least some of the ECs are concerned about the phase-in schedule, or lack of it, for enforcement. Certainly it takes time to get the engineering studies done, projects identified and designed, financing lined up, and capex approvals through ERC, before work can begin.
The engineering analyses that ERC used to define the targets are important and I would be interested in understanding that. There is such a wide diversity in circumstances faced in the EC sector, the ERC may need to have an exemption mechanism – my guess is that they would accommodate that as long as we're making progress on the bulk of utilities.
If putting in check meters and using heavy-handed control of pilferage significantly reduces facility overloading, then I suggest we have to stop and think a bit. Pilferage should be solved by getting people to pay for electricity usage. But if the load goes down significantly, then people that were using electricity are no longer using electricity. I would have to question what was that electricity being used for and are we, as a community, better off by denying that usage. That is partly why I said earlier that pilferage was a complex issue.
“But if the load goes down significantly, then people that were using electricity are no longer using electricity. I would have to question what was that electricity being used for and are we, as a community, better off by denying that usage. That is partly why I said earlier that pilferage was a complex issue.”
“Any sign of weakness, people will be encouraged to pilfer and there is no incentive for them to do it less but only to use more free electricity.”
We have seen people and whole barangays actually using ACU's 24/7, electric stoves and multiple washing machines for business and other power spendthrift equipment/appliances who are living in shanties and nipa huts. Things they can't afford and will not use if they are paying their electric usage.
I have seen in my practice that the common sense approach for most technical people has always been extensive and expensive technical engineering approach when the solution most of the time, not all the time, but most of the time, is simple non-technical approach. Add more substations, bigger DTs, bigger lines, etc. has always been easier and the usual approach. What we found out is that many times, the load increases with no corresponding increase on the sales.
Of course this is often likely to happen in urban centers, but with the way electricity is becoming a luxury for many parts of the country with rates between P11.00 to P15.00/kwhr, I will not be surprized if this is happening already on remote and rural areas as well where utility inspection team visibilty is unlikely especially with utility resources becoming very thin. This is further aggravated by a weak RA 7832 which seems to protect the offender rather than provide the utility with solid legal grounds for apprehension and prosecution of the said offenders.
Bottom line is, proper medication requires accurate diagnosis. The first approach is to address the Non-Technical losses. Do extensive study and provide lasting remedy by way of prevention, monitoring and prosecution. Only after, not before, will we have an accurate picture of the true technical losses. Most likely, expense will now be more affordable with better result and better system performance. My two cents opinion.
Also, it seems to me that a good audit should be able to determine the pilferage and own use, and therefore the technical loss. I'm just not sure of the cost of doing that vs. detailed engineering studies to get at the technical.
An audit will depend on how extensive and accurate metering is done on the whole system including the own use. By the way, own use is reported separately to ERC and can therefore be easily audited. In fact, ERC regularly orders utilities to submit under oath the different loads they include in their own use.
There are plenty of simulation planning software available in the market that can simplify engineering studies. However, in order to properly segregate losses, exhaustive metering system approach is still the best way to do it side by side with a planning software or just good up-to-date database. The cost will go heavily on the metering. Well placed energy/demand meters will detemine the energy/demand on feeders, sections and DT levels. This will in turn be matched with the total energy of customers per feeders, section and DT. This way, we get the actual (not computed or simulated) energies, demands at various strategic points. Losses can then be computed in every segment and section of the distribution system. This has always been the practice of utilities though in limited terms due to their meager resources. If a program can be made to incorporate all the readings, then we can generate a monthly report on the status of the different losses throughout the whole system. With the engineering studies or planning software simulation, we can compare the expected from the actual. But as I said, a good up-to-date, real-time database will do the job. This way, hot spots can be easily identified and where we can focus our efforts to eradicate nontechnical loss in the area. The progress and result of any correctional/preventive programs in the area can then be monitored in a monthly basis. After this, rehabilitation and upgrading of the facility will follow if still needed based on actual energy lost. In several instances, we have discussed this approach with Prof. DelMundo but apparently, the focus of his attention is more on the theoretical computation of segregating the losses rather than finding concrete solutions to the problem which understandably is not part of the scope of his work nor of his expertise.
The planning software approach needs to be widely adopted anyway. The ECs/DUs need it, along with a good up-to-date database, for …. um …. PLANNING.
I'd like to see a handful of local consultants/firms develop here that the ECs/DUs could tap into for expertise on such work so that each don't have to maintain deep expertise in these programs. It's an initiative I tried to kick off with IFC and they were interested. I think they are trying it in Mindanao on a pilot project (kick-starting use of local consultants, but not necessarily focused on planning software studies). Not sure how that's working out.
Many DU's are using SYNERGEE and EDSA. Aboitiz DU group use SYNERGEE for a long time now and they are very satisfied with its performance. There are many similarity with the UP segregation software but SYNERGEE is very powerful.
I will appreciate it very much if you can have an update on IFC c/o Jed's group on CAPEX studies for AMRECA.
Yeah, I haven't had an opportunity to meet with Jed Sevilla since the week his project was initiated. That reminds me I should try to catch up with him next time I'm back home in CdO.
I've modified the LRAC spreadsheet. Go to the spreadsheet and click on Comments to see what I've changed. The purpose is to mimic, to the best of my knowledge, how ERC would allow Visayas LRAC to be adjusted in the context of the Kepco contract. I haven't yet tried to mimic how the pricing provisions in the contract would change.
I don't know what the Globalcoal index FOB Newcastle is currently (i.e. for mid-2008) I'm simply guessing that it's about $150/ton. Anyone know?
I've updated my calculations for the Visayas LRAC forecast and the KSPC Rate forecast. The changes are described in the Comments section of the spreadsheet here. That spreadsheet is dynamic – so that link always contains my latest iterations on this.
This latest analysis shows that the LRAC will be lower than the calculated KSPC rate. So I'm now wondering if the KSPC rate has been modified from the formulas that appeared in the ERC Decision. Or maybe there's something else going on that I don't understand or see yet.
Heck, I'll just copy/paste the change notes here:
I failed to set Capacity Fee constant – fixed.
I've set Exchange Rate for mid-2008 at 45:1 and let it float with PPP.
I've added data from US CPI & PPI. For now I'm setting 2009 CPI & PPI at approximate current levels, dropping them both back to a long-term constant value of 4.0% starting in 2010. I'm setting Philippine CPI at 9.0% for for 2009, dropping it back to a long term level of 7.5%
I'm setting the Globalpower Newcastle index to $150/mt for mid-2008, dropping it 10% in 2009, another 10% in 2010, and then letting it escalate at US$ CPI. The Coal Forward curves 2009 and 2010 were in backwardation at the beginning of the year – I'm assuming they still are, thus the 10% drops which reflects the approximate backwardation that existed back in January this year.
This site has been a great source of information for us in QUEZELCO I. We are currently finalizing the energy supply agreement with COCO RESOURCES INC to supply 10 MW from their biomass power plant to be located in Unisan, Quezon. The LRAC spreadsheet was timely and allowed us to agree on a simple financial model to build on and determine the price.
Bing – that is super. We have so much to do here in the EC sector, especially on power supply. No need to reinvent the wheel – build on each others work and move on.
Just use the info for what it's worth – extend it, correct it, or use it simply to get ideas for your own analysis design.
Let me know what else might be useful to put up here.
I've been invited to present to next month's PhilRECA/NAGMEC meeting on the subject of power procurement – so let your GM know if there are any questions I can answer there.
I went to Bohol sometime before it I noticed that the electricity cost there is lower compared to other parts of the Phils. Is it because of it's location or is it because there's not much establishment requiring more enrgy consumption. Anyway, if this continue, it is really ideal to retire or move to Bohol in my later years. I really love the place. I think I left my heart in Bohol as they say…
Rates are lower on (Bohol and throughout the main areas of the Visayas )than in metro Manila and Luzon in general. The ERC sets NPC rates separately by major grid – Luzon, Visayas, and Mindanao. So utilities on Bohol can buy from NPC at the Visayas rate which is lower than the rate for Luzon utilities.
If you get to Mindanao you'll find that rates are yet even lower than those in the Visayas. The cheapest NPC rates are in Mindanao.
This situation won't' remain forever. As new, incremental generation is added to the grids, the prices will approach a roughly common equilibrium. I would suggest that we could expect tariffs to escalate most rapidly in Mindanao, and least rapidly on Luzon.
“…with Prof. DelMundo but apparently, the focus of his attention is more on the theoretical computation of segregating the losses rather than…” It's his job as academician.
If you are looking for solutions. Then try those who have the expertise in the application of Advance Metering Infrastructure which made SCADA obsolete.
“…Investments to reduce system losses may be higher than what you can save just to meet the cap. ..”
Investment on reducing system loss may be higher for that year's cap but still applicable to the following years' caps. Unfortunately, Aboitiz is only interested in this year's cap.
This mentality is common in Latin American countries where electricity prices are high. No wonder Malaysia, Taiwan and Singapore are laughing at us. Philippines has the world's second largest geothermal capacity. Then electricity should be Asia's cheapest.
Hi Philip. I haven't been able to participate in any of the Public Consultations on this, but my perception is that the ERC is holding pretty firm on the loss cap reductions and starting to look toward future additional reductions.
…ERC is holding pretty firm on the loss cap reductions and starting to look toward future additional reductions.
If this is true, then it's time to abolish the EPIRA Law, and abolish ERC. EPIRA Law has not serve its purpose after all.
ERC, in it's old self as ERB was never influenced by any utility specially on Electricity Pricing and System Loss Regulations. i cannot imagine how it has evolved.
Power industry in the Philippines is just the same as those in Latin American countries. It's run by Latino-style management.
I am humbled with your work as almost free for Philippine ECs. If there is any assistance I can provide for your ECs project on system loss, I am volunteering for free.
Sir, I am humbled with your work as almost free for Philippine ECs. If there is any assistance I can provide for your ECs project on system loss, I am volunteering for free.
The headline is simply dead wrong. And neither is this correct: “regulatory commission also on Wednesday granted a petition filed by the Bureau of Trade Regulation and Consumer Protection of the Department of Trade and Industry.” That, as discussed above, was issued on November 10!
Thanks Nick. Actually, I`m just trying to make a good description, and some updates, as well as geographicaly mapping in google maps all the power plants that I personally visited.
I agree with Nancy and subscribe to your crowd-sourcing idea although I have never participated in one. Two nights of cramming for the ERC hearing in Cebu on the ERC/PSALM petition brought me to your site. I wish I had found it earlier. I was able to refer your observation about the TOU implementation of the proposed increase and noticed that the ERC PA suggested an across-the-board implementation or what they called the “peanut butter” implementation.
Upon the suggestion of the ERC Commissioner, NPC/PSALM lawyers and their witnesses agreed with some intervenors to try a non-adversarial approach to this complex and complicated issue of rate setting for power. Nancy's post and what I gathered from this blog made it easy for me to agree to the suggestion and even offered to look for a venue where virtual meetings and exchange of ideas could take place. Would this be a start of you crowd-sourcing proposal? How do we proceed? I have uploaded some NPC files at http://rpweb.ph/Uploads/erc_files/ERC_2009004RC...
MrGam – Thanks for the comments and for the update of what happened at the Cebu Hearings. That's very helpful
I'm totally stumped by what Commissioner Reyes meant by “non-adversarial approach” but having the parties conference among themselves and then come back to subsequently continue the Hearing process is a common regulatory technique for reaching solutions.
The “peanut butter” approach to the rate design is precisely what the Napocor filing requested. In fact, their filing used that term, specifically. So it sounds as if the ERC staff is supporting the NPC approach. But I'm not sure why they would support that. And frankly it doesn't matter what the staff thinks. The Commission is perfectly capable of disagreeing with their own staff and in fact that happens surprisingly often in the U.S.
Well, I suppose this is already the start of crowdsourcing the ERC case. It may seem as if this is a conversation between two people, but I can promise you many others are reading it and already putting it to use.
There are a number of ways to better facilitate a wider exchange of ideas. We could try some. Let me think a bit. I'll propose something. Others can suggest here also. Maybe it's not too late to get something going on this case.
Actually, the Commissioner's suggestion was for the petitioners to make an effort to make a presentation of their case to the intervenors which could help in the faster resolution of issues and perhaps reduce the time spent in the formal hearings. I was the one that called it a “non-adversarial approach” because I already had in mind your crowdsourcing proposal. The hearing did bring together people that could start forming the crowd. Picking up from Nancy's message, we need to have collaborators to form the crowd and not adversaries raring to defend their positions in cyberspace.
This was also my response to Commissioner Rauf Tan's tongue-in-cheek observation during a break in the hearings when he noticed me requesting to load a file into the laptop of a PSALM officer. Jokingly, he smiled and said “That is called sleeping with the enemy.”, to which I replied, “No, this is non-adversarial engagement.”
“If I have time. I’m very busy.” actually meant “I don't want to be exposed as an ignorant and pretentious incumbent to the most important job in this department. That can jeopardize my retirement.”
That depends on what you are trying to sell. Me, I'm sold to your idea of crowdsourcing the improvement of the Philippine power sector. However, I must admit that I know nothing abut crowdsourcing. I only have the elementary idea of what it can do. So, please lead the way, you got one customer that thinks he has time to spare while waiting at the “pre-departure” area – I am a senior citizen and I think time is running out on me. I have realized too late that I have wasted a lot of time being busy with things that have not produced much meaning to my life.
Re-reading one of my favorite posts from 2006 today makes me want to reconsider the name for this group. Maybe “The One Percenters” or “Pissed Off Bastards in the Pinoy Power Sector.”
Nick, on the other hand, ERC has the brains. If they used Twitter, that would make the rate setting process very transparent. Then they would not be able to make lightning speed decisions such as the one issued on March 23 on the reduction of the increase in the generation charge for the Visayas (reduce the increase? hmm). The hearings in Cebu ended in the afternoon of Friday and the decision was out on Monday. Could this have been done if the stenographic transcripts were posted as soon as they were fully transcribed? The posting of the decision would have been made earlier than the posting of the stenographic notes.
I have a hunch that the Commissioners, as a whole, perceive that it is not in their personal best interest for quick and full public promulgation of ALL of their Decisions, Orders, and Announcements. I think that is misguided, because the web allows us to talk about that in a way we could not do before. The sooner they move to timely disclosure, the better off for them (as well as us).
Certainly using Twitter won't make the rate setting process transparent. But it will open the door to, or put pressure on, increased transparency. At least we could get timely notifications of publicly released Announcements and Decisions. It won't prevent the Commissioner's from delaying posting certain Decisions to the web. And it won't make the Decisions themselves any more transparent than they choose to write up.
Can you give me the list of email addres of the power plant company in Philipinesl, especially which use coal and Diesel for source of energy, because I want to send the for them to offer coal from Indonesia
I wanted to ask you about the prospects for solar energy and home energy in the Philippines – sourcing of solar cells, possibility of manufacturing solar cells in the philippines, etc.
BongV: I'm not extremely close to the solar activities here. Here's a link to an older Businessweek article on solar manufacturing in Philippines. http://www.businessweek.com/globalbiz/content/o...
Since the Philippines has a significant (or had, before the economic crisis) electronic fabrication industry, there are support facilities for manufacturing solar cells, I would think.
I presume SunPower is still manufacturing here – they made a significant investment and had an initial capacity of about 25 MW per year, I believe.
Aid agencies continue to fund significant amounts of rural roof top systems in poor, off-grid areas. There is at least one (probably more) private operators selling rooftop systems to upscale homes.
i'am connected in a company servicing motors & generators… the company i work with is the biggest & most advance in technology here in Philippines.. can you give me some of your contacts?.. thanks…
Unfortunately I don't have such a list. Try the ERC site http://www.erc.gov.ph They should have a list of power plants/companies that have been issued a COC – Certificate of Compliance.
I think consumer's have the right to know how their goods are priced. It's a very complicated thing for an ordinary citizen to understand but the point is that no over commercialism is practiced.
My name is Roy Teo from Finnsonic SEA Pte Ltd, based in Singapore. We are the subsidary of Finnsonic Oy, manufacturer of cleaning machine, based in Finland. We have a range of cleaning (ultrasonic and spray) and inspection machine (fluorescent penetrant inspection line) for the power plants. Some cleaning part example as follow. -thermal rotating equipment -process filters -gas turbine parts -power plant intercoolers etc…… With your expertise in power plant in Philippines. Do you think we can work out something?
The Loss Segregation is noble idea of a project, but unfortunately it is deeply flawed. The model does not consider source voltage measurements, source demand measurements, weather impact and loading factors, loops, wandering laterals, switching operations during the billing period covered, the load components (I/Z/PQ), neutral connection to ground for multiground systems, earth resistivity, actual conductor spacing and height, actual different phase conductors in a segment, harmonic impact, line conductor and equipment aging and deterioration among others. Most utilities looked up to heaven and then bowed their heads to create diurnal curves that did not consider variances in consumption patterns during weekday days, weekend days, and peak day of the billing period as well as the weather loading factors and coincidence factors and load pick ups. Funny, but, the thousands of Distribution transformer primary and secondary jumpers were ignored by the UP segregation software. And mind you, ERC and NEA were dragged into the sales promotion activities for the software because in 2005 (contrary to the consultant's vehement denial in his letter to the ERC that they are not promoting or selling any software!), the Segregator became available to the commercial market as DSAS. They tricked the NEA and the ERC, so it just goes to show that the guys behind the Loss Segregation were up to fatten their pocktes from a captured market.
I wonder how many electrical practitioners are in the utilities, and at the height of the loss segegation, very few raised a finger. I wonder what cowed them.
With all due respect, as I am not a PEE nor masters or doctorate degree holder in Electrical Engineering, data gathering should have been first implemented… Now data gathering involves substation and feeder metering (volts, demands, and power factor), precisely calibrated consumer energy meters and customer class load loggers. How can one run a realistic loss calculation based on load curves when there are no load loggers in the first place? And those who have one, logged data for a week on a residential class customer, then the next week on a commercial class, and so on… All because the poor guys in the utilties were sorely pressed for time to beat the submission deadline. The loss computation should also account naturally for the loads, and this is also bloody tough.. Utilities have to go from customer to customer to count the quantities and ratings of each type of electrical appliance of each customer. Customer loads naturally affect losses and the magnitude of losses depend on the load power factor. Surveying the secondary line sections and the customer service drops is no quick and easy task. The second part of the segregation is projecting the losses to five years from the base year, and such projection should be spatial or in layman's term, geographic map based. Sadly, just a few utilities have any reliable Geographic information system (GIS). Now, the issue of maps was skirted by the Segregation consultants claiming that a map is not needed in a load flow… a testament that the project proponents ignore their own guidelines.
The Segregator is very primitive compared to SynerGEE. In all aspects of power system modeling like data handling, circuit validation, objects modeled, SynerGEE is superior to the Loss segregator software. You can't use that segregator template for the Loss Segregation itself as too many factors are missing, and it would be tragic to use the segregator for CAPEX, power quality, protection, reliability and engineering economics analysis.
Pilferage is an unknown quantity, so the technical loss computation by using simulation softwares like SynerGEE is needed in the equation towards determining the extent of other losses. Simulation software is not just the only tool in loss reduction. Demand meters, thermal scanners, source meters among others are also needed. The simulation results only form a part of the basis to monitor suspected pilferers. A geo-centric model such as provided by SynerGEE fast tracks the resolving of loss contributory issues such as defective customer kwhr meters, loose connections, pilferage, switch placement, capacitor location, co-generation, etc.
Looking back, the Loss Segregation was hastily implemented for reasons subject to wild speculations. Many major loss factors were ignored. Thank God, there were few utilities and engineers who were discerning enough with their practical senses and stood firm on their ground.
We need MORE of the sector's knowledgeable people to weigh in on this so we can move toward some meaningful practices in the area of loss analysis and reduction. The analysis of losses is still a HUGE problem for the DUs; well, at least for the cooperatives.
I read your article above and wondering if what kind of power plant is being built on Bataan and what company invested on that project? Is it San Miguel or GN Power…?
Christian – You know, even for me, this is kind of hard to keep up with. I’m not sure who all is looking to develop on Bataan.
San Miguel recently bought an existing combined-cycle plant at Limay, Bataan. GN Power, last I heard, was close to starting (and may already have) a coal-fired plant at Mariveles, Bataan. And this gas-fired plant was recently brought to my attention.
Also keep in mind that this is the price at the plant gate. It excludes transmission charges, ancillary services, distribution utility charges and various other charges that are added into a retail electricity bill.
On my most recent Meralco bill, Meralco had added an additional P4.2/kWh for all such charges.
Does this means meralco charges you transmission rates, ancilliary charges, distributin rates and various other charges (which I presume includes the government’s eVAT of 12%) ?
Better clarify that statement first
Robbie – Ummm, yeah. If it’s on your bill, it means Meralco charged you for it. Was that your question?
All distribution utilities (like Meralco, VECO, the cooperatives, etc.) charge you their total costs of getting power from the generator to the customer meter. There’s nobody else to pay for that stuff. There is an issue of how to allocate those costs to various types of customers – but the customers, as a group, pay all the costs.
and the increases are in % terms. so a 2 peso increase on a 500 peso bill will look larger than on a 2,000 bill. since the increase is uniform across all residential customers
Hi mr. nick, i would like to ask u if u have data about the powerplants minimum stable load capacity and can i ask if what powerplants in the luzon grid are reserves..tnx
[...] Over on Asian Energy Advisors I’ve been posting for weeks about mainstream media’s coverage of the Masinloc deal. You can get a taste of it with a few of the links here. [...]
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Hi there Nick, thanks for providing clarification regarding my concern.
Then my question is, if the natural gas is indeed flowing and abundant, how come power prices are still very expensive in the Philippines.
I know the PPA contracts that Ramos propagated during his term have pegged energy prices at a high rate despite its abundance.
Hey I am glad you started this blog, we need more of these in the bloggosphere!
Hey, I will link you to my blog!
Thanks, Mell. I’d like to see more bloggers talking about energy too so I can point to them and create some discussion.
Yours is the 64 thousand dollar question. No simple answers. It’s not only a Philippine problem – similar things are happening in California, for example.
I’m moving toward the opinion, however, that not a single peso should be invested on energy in the Philippines that doesn’t actually “lower” the price.
Not provide a promise of lower costs in the future at the expense of higher short-term costs or provide some general theoretical basis for lower costs, but actually lowers it today. Not enough focus on that.
I think I’ll try to test that theory as we go along in the new year and see how it plays out.
Nick,
this isn’t the outfit I was referring to, although I know the owners of SHemberg too. The cocoshell boiler I referred to was the one of Pro-foods international.
viking
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I posted the slides now too. As soon as I have time I’ll annotate them. http://www.fullcirc.com/weblog/2006/02/seven-competencies-of-online.htm
This is excellent.
I’ve made numerous changes and additions to the DOE data from a number of other sources, so this database has morphed into a stand-alone dataset unrelated to any specific single source.
Contributions/comments are welcome.
nice
Thanks for the link Nick. Yep you guessed correctly, I am based in Houston, Texas US. I started with UtiliPoint in February, and am using the blog as a way to communicate with members of the ETRM community. I’m finding it to be a tremndous tool, and I wrote a piece in UtiliPoint’s Issue Alert about how companies need to take blogs seriously here: http://etrmcommunity.com/site/modules/wordpress/2006/04/03/whos-talking-about-you/
All the best
Andrew
Just to clarify, FeedBlitz totally honors its readers privacy. The difference is that we do permit readers’ email addresses to be shared with the publisher – we make this clear on the signup pages and in the FAQ and in the privacy policy. Readers can also register with FeedBlitz anonymously if they wish. It seems to us that if you want to have your reader hand out their email address for your content, it is reasonable to share their address with you. What you do with that information is up to you, but it isn’t a privacy issue.
Phil – You are absolutely right. This isn’t necessarily a privacy issue nor a weakness with Feedblitz. It depends on what one wants or is looking for. Some would consider the Squeet approach a weakness.
I’ll change the wording on my post. Thanks for stopping by.
Like Neal Cruz, I also believe that it’s PSALM who’s the greedy here ogre here, not First Gas.
YNN’s bid $561.74 million, i believe is a gross estimation blunder on the YNN’s part. Perhaps the 56174 numerals came out of a feng shui divination, that’s why they bet on it with all the shirts on their back.
What I pity here is Meralco, which is again being “used” (negative connotation) by the government. (Remember how the goverment of FVR used Meralco to make the Malampaya gas fields viable? Now the government is arm-twisting Meralco to make it appear that privatization is going somewhere.) How can Meralco refuse when the government holds all the cards?
Oh well … as they say: “only in the Philippines”.
Yes I do remember, Noli. Though, to be clear, it was the Meralco (and Napocor) ratepayers that ultimately shouldered the Malampaya risk.
But interesting one-two point on Malampaya-privatization.
My feeling is that a fundamental domestic thrust, politically, of the privatization program is, quite simply, to have the government hold fewer cards.
Good to see others see the blogosphere as as big influencers on Milberg Weiss and on other matters. There’s already 21 posts regarding Milberg Weiss up on the blogosphere this morning.
Great!!! I have a post for your at http://www.jcmiras.net/surge/?p=9
Wow. I’m glad to see you’re blogging. More bloggers is good.
Nick,
Thanks for this. WOuld like to have the slides. viking
I could scan and publish them. But they are kind of small – four to a page and therefore often difficult to read.
Paul Krugman also pointed out how the power suppliers in California colluded to cause artificial shortages which would result in raising the price of electricity.
I agree that the real role of WESM and its participants should be clarified. I have found that many supposedly knowledgeable people carry serious misconceptions about the upcoming market.
For example, according to Mr. Wallance, “[O]nce full open access is in place, a company that consumes one megawatt or more at peak load, for instance, may go to the market and bid for power.” This is not true. When WESM starts, only generators will actually provide bids of price and quantity. The buyers (distributors and, eventually, qualified end-users) will only submit their expected hourly load. Buyers from the WESM will be price-takers, who will have to pay whatever price is determined through WESM. There is very little buyers can do in the market.
Mr. Nichols,
I too am glad that both PSALM and ERC have published their responses. However, I do not share your opinion about Cruz and Banal. They are bad and dull writers and like most local columnists think they know it all. Also, they are very often paid hacks.
Yes, they might be running at that low Capacity factor because Mirant Sual Plant is used as an Spinning Reserve. Meaning, as a reserve, most of the time, only a part of its rated capacity is actually utilized. However, as an NPC-IPP they are paid for 1000 MW capacity or 83.33% of its rated capacity.
Summer, eh? ERC, WESM, and PEMC recently formed a tripartite committee to implement mitigation measures against price spikes and volatility. There’s a proposal to set an offer price cap at P62 per kWh. If I understand what you’re saying, we won’t really know if there’s something really wrong until next year, that is, when the tripartite committee’s life has ended and while we’re all busy with elections. Interesting …
P62/kWh? Just as a data point for reference – in California, anything over P13/kWh ($250/MWh) is considered a “price spike” and they have a “soft cap” set at about P21/kWh ($400/MWh).
I can’t imagine a P62 limit coming into play this year.
It seems to me that the first eight months or so will be spent with everyone finding their sea legs, seeing how the markets respond to everyday types of contigencies, making sure billing and remittance systems are working, a basic system shake-down.
I agree with your observation that transmission issues will become more apparent with the operartion of the Philippine spot market. I believe in the principle that ‘risks should be borne by the one most able to manage it’. Unfortunately, there is NOTHING in the spot market rules that incentivizes TransCo to address line congestions that jack up settlement prices in the market. Buyers in the market will just have to bear the additional congestion costs while they wait for TransCo to move.
You hit THAT nail square on its head.
Thank you for the appreciation. I’m just a simple employee, doing my little work the best way I can. I can’t make big decisions, that’s the job of the Commission. So when people complain “electricity is so expensive, why can’t ERC reduce the rates?”. Even we joke about it with the Commissioners “Sir/Mam, why don’t you reduce the rates? hehehe”. They just smile and say, “if only we can, we’re paying the same expensive bills you know”. That’s what people forget. We are all consumers. We don’t get discounts in the ERC. Even generator employees don’t get discounts.
Anyway, that’s why I encourage people to ask, seek answers to their questions, rather than blame the government for everything. Information can enlighten you, and eventually help you figure out how you can help the country. Try seeing the bigger picture.
So, a potential investor in generation assets in the Philippines would now have three choices:
1. Build a new plant
2. Buy an NPC plant
3. Buy Mirant’s plants
If the law of supply & demand still works, given one less investor (lower demand) and the addition of plants for sale (increased supply), then the prices to be offered for NPC’s plants would fall, or not be nearly as high as currently expected.
That’s a very good observation, Martin. There’s only so much capital looking for a Philippine power sector play. I would have to agree.
The people at PSALM must be disheartened by this … or dancing in the backroom, depending on just how cynical you are.
Hi Nick. thanks for refering to my post. By the way, what country’s spot market are you refering of?
Zing! Go ask Lasse.
It’s blocked again…I guess I was just early that time that the MIS hasn’t activated the “wall” yet. But everything here’s blocked, even yahoogroups. So I can’t access my egroup’s files, which by the way, is important for my masters subjects (our profs use egroups for announcements and posting files and homework)..but oh well, my studies are none of ERC’s business so… just have to access my “unnecessary” websites outside. It’s ok, I just hope our office generate some savings for this, so we’ll have some bonus this Christmas..I wish!!!
Correct. There is no competation yet in the market because;
1. Meralco source the majority of its power from its contracted Ipps through bilateral contracts, and
2. Except from Meralco IPP’s, all generators in luzon are still own by the government, both NPC plants and NPC IPP’s.
How could there be a competation?
Thanks for the link. Very interesting.
Question: how should a market’s performance be measured? How can we say that the Philippine WESM is “working”, or “doing good”, or “broken”?
Aha. That’s a very good question. “Performance” can mean different things to different people. Also “working” can mean different things.
I was taking a simplistic view of performance – i.e. what have the prices been, has there been congestion.
PEMC actually makes some attempt – although there’s no transparency to their calculations – at puclicly tracking certain “market competitiveness” indices. They publish Market Monitoring Indices Reports here. The Weekly report is more interesting than the Daily. In here they include, HHI, RSI, and PSI measures.
But in the end, we still have to rely on “independent audits” of WESM to tell us if they are appropriately translating bids into market prices and dispatch instructions.
It will be interesting to see what kind of reports the Market Surveillance Committee comes out with also – assuming they will be able to speak publicly without being censored. I’m just not up to speed on the governance issues and mechanisms – BUT IT’S IMPORTANT.
More competition for investors’ dollars. I guess this means that PSALM will not get anywhere near the same price YNN offered for Masinloc, which is supposed to be back on the auction block.
Again, thanks for pointing us to the reports page. Very interesting, such as the one that shows First Gas Sta Rita as the “pivotal plant”. If I were Meralco, does this mean that I should tell Sta Rita to be always available (because if they don’t generate, spot market prices are likely to shoot up)?
oh well, what do you expect from pete ilagan? sensible ideas? ha ha. it’s like expecting honesty from politicians.
anyway, my theory is that this latest gimmick of pete is actually coming from npc, which is always looking for every opportunity to malign meralco’s ipps. pete is just being used as a dummy spokesperson.
it’s good that there are people like you who really understand the not-so-simple nature of such price comparison.
thanks a lot for giving your “corrective” opinion. I just hope the erc gets to read it.
have a nice day sir.
I am a residential customer of Meralco, a consumer. Contrary to Mr. Marcelo’s judgement (who I think is from Meralco) of NASECORE’s request from ERC, I believe it is pro-consumer. Obviously, Mr Marcelo is not aware of consumer complaints regarding Meralco’s violation for not sourcing the lowest cost of electricity which is mandated under their franchise and EPIRA.
And if Mr Ilagan is the spokesperson of NPC then why was NASECORE an oppositor to NPC’s petition for rate increase which it even raised to the Court of Appeals? Is this hard to understand for Mr. Marcelo who must be handling Meralco’s PR? KUDOS TO NASECORE.
Noli – no need to “hope.” Here’s a list of emails at the ERC – forward away.
Mia – I agree we need more of what Pete is doing – offering up alternative ideas for discussion and debate, with a consumer focus. Meralco, admittedly, does some of that, but they can’t do it aggressively; they are conflicted.
Thanks for sharing my post with your readers. You’ve got a heck of resource going here in less than a years time.
According to Meralco’s Annual Report for 2000, their capital expenditures for 1999 and 2000 were P6.53B and P5.39B, respectively. (I guess that’s in terms of 1999 and 2000 pesos.)
I stumbled upon your blog accidentally today and I was quite impressed with the amount of info you’ve accumulated on the Philippine power sector. I was also quite interested in the database you compiled on all the grid-connected plants in the country. A couple of years ago I compiled a similar list but limited it only to the power plants that NPC was privatizing- although my main objective was to keep track of the privatization schedule, who was buying which plants and for how much, etc. Needless to say I haven’t updated it since Dec 2004 as no plants had been sold since then. In any case, your excel file is way better and more detailed than mine. I downloaded it and I’ll see what I can add, if any, although it seems you’ve really covered all the bases.
On a related note, I think Google has a new spreadsheet program out which could be the solution you need to make this database publicly editable.
Excellent. Thanks – all input is welcome. And I’m sure others will welcome it too.
I’ve been looking at Google Spreadsheets. From what I can tell, I have to actually send an invite to an email address before they can edit it. But I suppose that is do-able. I’d rather have an open wiki-style where people donn’t need to seek my permission and we could just revert the trash.
I’m going to take another swag at Google Spreadsheets, though. I have some time today.
Good call on EditGrid Nick. It does seem to be much better than Google Spreadsheets. I see you also added a WESM price spreadsheet there. The power plant database already looks to be pretty comprehensive, though. I can’t think of anything to add to it at the moment, but I’ll definitely get back to it from time to time.
I’m still surprised that someone actually put up a blog about the Philippine power sector. Your website is a terrific resource for people involved in the power sector as well as for those who are just plain interested in it. Keep it up!
I think I understand the need for a forwards market. However, I do not understand the value of a capacity market. Will this also be a spot market? What value would it bring to the industry?
Good question.
Capacity markets only makes sense if there is a regulatory obligation to meet Resource Adequacy requirements. It would be a forward market in capacity – not a spot market.
For example in California, the CPUC imposed a new regulation saying that by October of each year, the IOU’s had to demonstrate that they had enough capacity (identifiable real plants) under contract for the following Summer months to meet 95% of their anticipated Summer demand and they have to have 100% under contract on a month-ahead basis. traditional Forward contracts are energy only – there’s no plant backing it up and so they don’t count.
So a capacity market will facilitate the trading of short-term capacity so that utilities can balance their requirements on a short term basis (i.e. if their demands don’t develop, they have a way to unload capacity they may have pre-purchased, and vice versa).
Anyway, capacity markets go hand in had with Resource Adequacy requirements – which we don’t have yet in the Philippines.
Here’s an older post. Not much there; I’ll try to write more on it.
Guilty party here…Thanks for pointing that out…will work on that right away…
Ay! Hoop Addict. I never would have guessed it’s you.
People actually get surprised when I tell them that I have a Mech Engineering degree, they presume I’m an IT grad because I work in the IT field…*snicker*… Thanks for the link love
Yeah, that’s our plant. You can see the First Gas (Santa Rita) and FGP Corp (San Lorenzo) Logo painted in the roof.
Yeah, I thought that was pretty cool too. I don’t know why I can’t find Ilijan – maybe the satellite photos on that side of the bay are older and it’s just not there.
I do not know what costs go into transmission tariffs in California, but here in the Philippines, TransCo’s current rates include not just wheeling charges, but also ancillary charges. It has been said that the latter are more properly classified as generation instead of transmission. I think that ancillary charges account for about half of TransCo’s rates.
The four representatives from DU’s will come from both investor-owned and member-owned entities. Right now, I think that the four are divided equally between investor-owned DU’s and cooperatives.
Ah, that’s an interesting point. A/S are not in California transmission costs
This story seems to be right up your alley Nick. I’m still waiting for your definitive take on the price manipulation issue. For that matter though, do you think we shouldn’t have gone ahead with starting the operation of the WESM while so little of NPC generation has been privatized?
OK, my 2 cents worth, that make take off onto some tangents.
I don’t have a particular problem running the spot market prior to full privatizaton as long as the rules and procedures appropriately reflect the state of the market and its competitiveness. And that may indeed be where we are.
I expected the market to have run-ups; but I thought the participants would have at least waited till they had a more publicly understandable “excuse” to run it up. But I’m just cynical enough to believe that what is happening could have a specific and calculated purpose.
As a side note: The existing IPPs are not merchant plants. Their profits are governed, generally, by existing bilateral contracts – and quite frankly as far as the existing plants are concerned, the owners probably don’t care whether WESM is even around, much less competitive.
I do believe, however, that the spot market provides opportunities for these to create additional value – but their contracts may prevent both the owners and the off-takers from tapping that value. That’s a waste (and overall economic loss to ratepayers) – if there’s value there, the parties should find a way to tap into it.
The only real merchants in the market are PSALM plants. They are currently unhedged. There are three ways the government can hedge their investment in those assets: Transition supply contracts, sale, or revert to rate base recovery.
All three of these ultimately impact ratepayers or taxpayers.
I think we should also incorporate accuracy to transparency. DOE, for example, is trying to show transparency by publishing data on their website. However, base from experience, these data is not that accurate as it should.
That’s an excellent point, Alfie. I’ve heard comments in the industry regarding the credibility (or reliability) of Napocor’s historical annual load data, for example.
But the more data you put out there, the more difficult it becomes to dissemble – since discrepancies start to show up when relating one piece of data to another.
Sunlight, as they say, is the best disinfectant.
Meralco has a take or pay contract with its IPP, and its IPP also has a take or pay contract for fuel with the natural gas consortium. The IPP thus bids zero because it virtually has no avoidable cost. I remember talking about this with Meralco people and was informed there was some limited fuel bankability. Just taking advantage of this would be beneficial to the economy as a whole but not immediately to Meralco consumers. I’ve pondered this problem before the spot market opened.
Good point. I had forgotten about the fuel Malampaya fuel issue – which is somewhat unique. But that applies only to Sta. Rita and San Lorenzo, not QPL of course.
And Mirant Trading (or whomever they are) may not either, frankly.
It seems I missed Eñano’s article in the papers. Do you still have a link to it?
Here’s the link: http://www.manilastandardtoday.com/?page=business6_oct20_2006
I’m not sure why I failed to include it in my post – I’ll go back and edit it in.
Happy Anniversary Nick!
More Power and Good Luck for the years to come
Daghan salamat, Hoop.
Marvelous. Thanks, will spread this among my friends!
Marvelous. Thanks, will spread this among my friends!
Congratulations on the anniversary Nick! Over the past year this website of yours has been an important source of information for me in my work. Cheers!
wesm week4 report cannot be opened…
most probably a corrupted file…
Week 4 of 2007? I’m not having a problem with opening their file. Try again.
Well, now that we had an 8 hour brownout again this weekend and now that I found out it was because of a Transco maintenance activity, this is now making sense.
These outages are probably related to Transco maintenance and Transco is trying to schedule the outage to be as less disruptive as possible on retail customers – thus the “odd” times. Odd meaning – not coming at peak supply times when deficient supply or facility overload outages usually occur.
Let the market work! Have prices reflect the tight supply to get those oil-fired peakers in-the-money. Then there’d be less need for all these government “begging” nor it’s dancing for rain.
Hehe. Yep. But more to the point, the DOE – or rather ERC – can have a pro-active role here. The ERC, with DOE backing, should see to it that the utilities actually implement a program to procure power during such emergencies from embedded, private generators. DOE public appeals can actually have an effect and therefore a role – but they should complement economic programs – programs that, after all, actually do have a public interest.
I do so wish our politicians and captains of industry here in the Philippines would adopt solar as a solution to the nations energy needs.
We are so rich in sunlight!
Delbert
Nick,
I didn’t know about Cyril’s claim of lowering atmospheric temperature and don’t know the science of this, much less the benefit-cost considerations.
I have not seen any report on how much the other parties bid for Masinloc.
Sounds easy to implement but injecting those precious MW to the system is not a simple process. These embedded plants should at least be a registered member of the WESM,with WESM compliant meters, followed all technical requirements, no problemo with “synchronization”, and have a direct link to the grid.
eDOE – But wait, the Secretary just asked for them to inject those precious MW into the system. The issue of synchronization, technical requirements, grid connection – or WESM registration – didn’t even come up in his appeal. So it must be possible to do already.
I don’t want to play down the administrative requirements of metering and remittances, but I’m just suggesting that a program be put in place to “pay” them to generate or alternatively take load off the system during grid shortages – and make it as simple as possible.
As I noted in an update to the article above, the journalist probably got it wrong – the downpayment was 40% apparently.
Several articles reported the other bid prices. Here’s one: http://www.manilastandardtoday.com/?page=business1_july27_2007
$710 million – First Gen
$650 million – Anglo Cayman Energy Dev. (China)
$606 million – Suez-Tractabel
$588 million – Ranhill Berhad
It’s not clear to me if there was a sixth bidder. Apparently Trans-Asia Oil did not submit a bid.
I think the prices of energy nowadays are more competitive than before. With the establishment of the WESM, distribution utilities have now an option where to procure their energies, i.e., from the WESM or NPC or owned-IPP.
It is a fact that WESM prices are fluctuating. Some intervals have prices that are below the existing TOU rates, while there are intervals that reflect very much higher prices than the TOU benchmark. Hence, a well-executed BCQ declaration could enable a DU to take advantage of the lower prices and get rid off high market prices.
However, it is quite frustrating the some DUs do not want to exercise their privileges and rather leave their fate to NPC, which is currently trading on behalf of those DUs that are indirect WESM participants.
But it is quite more frustrating that NPC does not allow DUs to exercise their right to declare BCQs after the fact, which was in accordance with the WESM Rule.
NPC always argued that such would result to cherry-picking. It’s true! However, NPC does not realize that whether DUs cherry-picked or not, the energies that they declare in the market as BCQ are already committed, which means regardless of how high or low prices in the WESM are the DU would still be paying the same TOU rate for the corresponding intervals where they chose to declare their BCQs lest they’ll be charged at higher market rates.
In so doing, cherry-picking is just aimed to avoid being charged with higher market rates vis-a-vis TOU rates.
sure its a great thing. the trouble is, it will have to go through the ERC and the meralco board (which is manned by some government officials). this will fall under new operating expenses, something that rarely get approval. if this is, say a repair of a pole, this is approved as of yesterday. but new projects that need new equipment? dont hold your breath. new equipment means new rate base which also means new rate increases, etc etc.
Heh! Interesting perspective from an insider, Robbie. Maybe I should have said “I hope a Board member reads this.”
I think i’ll disagree with you on this one. Why the Disco’s? As provider of last resort, they have no incentive to change their purchasing/pricing behaviour… unless they start losing their customer base and are forced to compete for them. I agree something has to happen on the demand side but i don’t think we can expect that to come from the Disco’s themselves. When are Globe, Smart, etc. going to enter the ESP business? Or maybe it’s time for a ‘myPinoyEnergy’ startup?
well sir, that is most easily explained.
power prices are lower in mindanao because the prices in luzon subsidize them. so as to make mindanao more enticing to investors and make luzon less congested.
if EPIRA or Open Access is here today, we shall see if this is still true.
from the marketingaddict blog, here it is:
I have a bill in front of me, so here goes:
generation charge – the cost of power from napocor
transmission charge – cost of power being brought from napocor generators to distribution utilities (like meralco)
system loss charge – an ERC scheme where power losses due to technical (power dissipated by power lines and transformers) and nontechnical (pilferage, etc) are billed to the consumer.
Distribution – charges for bringing power from transco to your homes. also for metering (reading and supplying meters),
lifeline discount – subsidized cost for power up to 100 kWHr
VAT – I think you know them
missionary – so that power can be made available to unprofitable islands in the philippines
environmental – I think you also know this one
Just to be clear here, when I talk above about the demand-side, I’m referring to the market demand for what the IPPs are suppling. And I grant that Disco’s aren’t the only ones. Large industrials with “access” can compete for IPP power too – but they are tiny compared to what the Disco’s purchase.
Ah incentive! Yes, I didn’t address whether the Disco’s have incentive. I just made a point that they are the ones that can drive pricing down. Whether they have incentive to do that is indeed an issue. If the Disco’s want incentive, I’m sure the ERC can oblige. I believe there are indeed incentives beyond regulatory fiat.
In the words of Jonathan Macey, we have the “enabling” rules (unregulated pricing for power production). Maybe we now need “mandatory” rules to force the Disco’s to procure and procure competitively – this is exactly what has happened over the past five years in California.
Robbie – nice. A nice start, anyway. Maybe Meralco can get you to write something like this for printing on the back of the bill! Or for their website.
As of this moment, there is no “tangible incentives” whatsoever for the Discos for procuring efficiently. Perhaps this is one reason why they are not looking into opportunities in the WESM (which is currently the only available facility that provides opportunities to lower down generation costs).
Nonetheless, there is the pending new AGRA that would provide incentives for Discos, once implemented, by having them kept as much as 50% of the savings from effecient energy purchasing. But in case the procuring rate is above the regulated benchmark, then the difference would be absorbed by the Discos as losses.
But looking into another perspective, there are “intangible gains” that Discos could get in lowering down generation rates. One, is liquidity – the lower their costs, the more they beef up their cash reserves. Two, maintaining lower cost would make them attractive to contestable markets once open access begins. Three, lower cost might be perceived as good customer service by the the captive markets.
It seems there is going to be a significant amount of energy used at the new Google complex. I wish I had a small fraction of that bandwidth available here in Davao.
I wish I had some of the enery too but thats wishful thinking.
I was apprehended not too long ago by Pasig traffic police who offered to let me off for some consideration for an illegal u turn. I declined, but then had to spend four hours to get my license back.
We wanted to determine which area/province has the low electric rates because we intend to set up a small footwear factory? Please advise where can we get information.
Leah, well that’s interesting. You’ll probably want to look at the Commercial Rates (as opposed to Residential) and it may depend on the size of your electricity usage.
However, I think I have a file that has all the “average” rates for each of the electric cooperatives for 2006. You can scan through and find the lower ones. Send me your email. But that file won’t include the private utilities that serve areas like Davao City, Cebu City, Cagayan de Oro, Tarlac and several others.
The lowest rates overall will generally be in Mindanao. Are you looking at Luzon specifically?
Hi Nick,
Thanks for your reply.
Would really want to get the rates and specific province/area in Mindanao? What is the average rate?
Also, getting the information for Luzon will be appreciated.
Leah
Leah, go to my Wiki page here and download the Financial & Statistical Summary excel worksheet file. One of the far right columns is “Average System Rate” – which is the average price of power from the EC. It’s just an indicator of price levels – but it’ll give you a place to start shopping from.
If you have problems with that file or need it in another format like pdf, go to the list of data files here, find the “2006 fin and stat summary” and download it in whatever format you want.
i want to see the list of all power plants in the philippines because it is my assignment
Hi John. Go to the link in the post above and click on the “2006 Existing PP” tab at the bottom of the page. That’s the official DOE list of power plants.
Cool post.
I think you’ll read our website..
Thanks
Got here by following you on twitter. That’s a whole lot of power. Probably sabotaged. Happens here all the time. By the way, this is the first blog I’ve seen that uses OpenID for commenting. Interesting! Cheers.
Thanks, Dennison. Are you still getting sql errors in commenting on the blog here. Your comment seemed to get thru ok. I’m posting this comment also as a test for myself.
I’m turning off a plug-in for Subscribe-to-Comments. That might be problem.
Yep. That seemed to fix it. A Wordpress 2.3 compatibility issues I guess.
Looks all good now! OpenID does not work though and is giving me errors
Yeah. I’m now having problems now too. It’s redirecting to my openid provider, trying to process the request, but not doing it successfully. I’ll work on it – if I can’t solve it, I’ll pull the plug on it, unfortunately.
Any thoughts on what caused this incident?
Bambi Capulong of Transco says it was a “technical glitch” occurring at 1:04 pm on a Sunday afternoon that caused caused 90% of the whole Transco/Napocor Mindanao power grid to collapse. But if it was indeed a “glitch” – and they could certainly tell if it was a glitch or not because it is standard operating procedure to have in each and every Transco substation a “glitch detector” that “measures any false or spurious electronic signal that may be caused by a brief, unwanted surge of electric power” and turns on a red light on the panel. So all they have to do is see if that red light is on or not – if it was indeed a glitch then there were other things going on at time that compounded the immediate impact of the glitch. The system is designed to withstand a single contingency – if a relay fails due to a glitch, then the system should remain stable even if a single circuit is tripped. But if other conditions are also not normal, then the failure can cascade – that is probably what happened. But Transco is not disclosing what the other conditions were that contributed to the cascade.
Or it could be disgruntled employees. Or it could be that the Palawano tuko has migrated.
cant locate list of power plant
Mindanews reports that Emmanuel Abellanosa, Transco Assistant Vice President for Mindanao, says the cause of the problem was a conductor “flashover” (somehow related to an insulator, it seems) in the switchyard of Agus 6 Hydroelectric Power Plant in Iligan City.
A flashover is not a glitch.
The fact that a “flashover” occurred is one thing – it’s a matter for the Transco engineers and maintenance crews to address. But the fact that a “flashover” took down 90% of the Mindanao grid is a matter of public concern (we’re paying, afterall, for every peso Transco spends and invests). It may be that a “cure” for that situation is hugely expensive and we all might just agree that we take the risk of recurrence. But the conversation isn’t engaged. We have no knowledge. We have no venue for input. That’s the type of environment that a “public utility” should think about changing.
Mel – they are there. I just clicked on both of the links in the post and found the lists. Maybe I’m missing the problem.
Hi Sir Nick,
This is also a test. By the way, thanks for the link. I should have also asked you for more details on that story, too.
Ahoy. Good exercise. Wait for me to get back from China before you submit your bid.
I don’t know if it would make a difference in your calculations (I’m too lazy to download the spreadsheet) but I believe the EPIRA calls for a 25-year concession award with the option for another 25-year extension after a performance review.
You know, pturingan, I think you’re right. I’m not sure why I was thinking 10 years. It will make a difference – driving the price down. I’ll try to take another look.
Thanks for linking my blogs..your site is a nice place especially for electrical engineer.
Very nice collection of reference material for power engineers you’re compiling. I especially like the photos. They’re very helpful I think.
So this is where you hide the more serious work you do.
Will come and read each and every entry seriously when I get back from an out of town job.
I don’t hide nor run. My unsolicited analysis should be in Would, but Blogger is making that impossible at this time. My political beliefs—past and present— are public, even to the bilaterals and multilaterals who want my services (including the ADB) and they have never confronted me on these.
Hi Viking, i responded to your email from last week Thursday. How can i help you?
for dagupan electric corporation, please visit http://www.dagupaneletric.com
your site is very informative hope to be of contnued use to me. thanks.
your site is good.
Thanks, Manny. It’s nice to see a webpage on Dorelco too.
There is going to be a large focus on EC issues on this site over the next few months. Let me know what I can put or discuss here that is helpful to the ECs.
Thanks Nick. That’s exactly my point.
It was good PSALM finally decided to let the press into the bids opening, rather belatedly. As of Monday afternoon, Charo Logarta told me she was considering submitting a petition on PSALM transparency though others in the energy beat were not receptive. Later in the evening however, Business Nightly on ANC announced the PSALM change of heart.
What’s not been discussed so much in regard to the Transco valuation is the regulatory regime, as any perceived inconsistencies would tend to drive valuations down.
Good point, Viking, about the regulatory regime. I’ve got to believe this is one of the biggest uncertainties the concessionaire faces. Here in the Philippines, it’s basically the same as sovereign risk or political risk.
There’s a couple of ways the bidders handle this uncertainty. They can include various risk-weighted scenarios on the revenue levels or they can just up the discount rate – kind of a rough justice way to handle that uncertainty. Either way, it drives valuations down.
i agree with the two reasons that alfie brought up. congestion has always been a reason for our systems inability to utlize far but low cost plants. as far as i see, transco has always tried to alleviate the constraint problem through transmission projects. as mandated in the pgc, the SO must operate with n-1, theoretically meaning that no constraint will ever take place. the system at this point is not compliant with this. the problem is that upgrading the system to meet this would have drastic impact in the rate. however, this goal is also a moving target. its a matter of weighing which solution to pursue,. it could be a combination of generation and transmission but how much of each? a deeper cost benefit analysis is required to decide wisely.
hi Nick, a million thanks for dropping by at my blog, i find your Asian Energy Advisors very interesting to note having that niche of information and analysis about energy resource management.
i added you to my blogroll, so that i can get in touch with your blog anytime i’m online
wish you a blissful new year
namaskar,
Hector Minoza
Salamat, Hector.
Thanks much Nick.
A Happy New Year to you…
Thanks for writing, recording and publishing on the net, Robert. You make it a richer place for us in far off corners of this world.
Like the title of your post ‘ Can you stop a runaway story?’ And you’re right about situations like Philippine electric utilities and other companies who have no effective Internet presence to stem the tide of a story unless they’re blogging. With out a blog they have not a voice and no way to engage in the conversation going south on them.
I would have appreciated an invitation to that meeting.
I would have had a lot to contribute to that meeting. What gives?
Yeah, I know. You would have. Definitely.
I was informed and invited only late Friday morning. Didn’t really know what the agenda was – or what Alex had to do with lighting currently. Turned out to be more meaningful that I anticipated. Bad foresight.
I’m finding that I can edit out mistakes, so if you screw up an entry, just enter a new record with the corrected information.
You can monitor the edited spreadsheet here, including calculated rates.
You can download an .xls version of the edited version here.
how do we sort out the electricity crisis??
I presume you mean the crisis in South Africa? Well, like it or not, no one else can do it but the government and they have to step up and take charge. It’s politically dicey. Gray Davis, the Gov. of California didn’t survive even though he put in place structures and programs to dig California out of the mess. The legislature did a lot of heavy lifting too.
Oh, yeah – get some effective consultants advising the government that can effectively work behind the scenes. Avoid the bullshitters.
Have you checked out the EPIRA amendments passed in the House of Reps? Any comments on their proposals to accelerate the implementation of open access by reducing the privatization threshold for generation plants and IPPAs to 50% from 70%? A number of people I talk to believe that this won’t be a good thing because it still leaves Napocor- and PSALM-owned plants with too much power in the market. I believe the Senate version of the bill might adopt a similar provision as well although that remains to be seen.
pturingan: Ay. You’ve got to ask somebody with a PhD in economics. It’s my understanding you’re not likely to get a competitive market with less than 70% of the assets privatized – and there’s a bunch of other conditions. I’m not an expert in this issue. But the 70% was not set arbitrarily.
It’s all flawed. You don’t need an economics degree to understand the conditions (heck, someone up there has an economics degree, and look what that person is lobbying for?) Ooops. That’s all I can say for now.
(This is my personal opinion)
Thank you, Lisa. You’re right. The situation is pretty damn clear.
Well, Vince Perez has the ball, apparently. Let’s see what he does with it.
Well, he’s playing it safe. Anyway, there’s a way to speed up open access, but there’s no promise of competition. The choices are limited, and prices are still regulated. Better wait and enjoy the full benefits. Patience is a virtue, hehe.
Yes to PEZA open access, but no to PEZA as energy regulator. There should only be one regulator for the power sector, and that is the ERC, so as not to complicate matters.
I wonder what is NPC’s supposed promise to the Ibalois?
Elrakal – Re single regulator: I’m definitely not arguing for PEZA’s case in this instance. My knee-jerk reaction to PEZA’s preemption of ERC regulation is that it’s a bad idea – but I haven’t looked into it in detail. In general, I’m less concerned about multiple regulatory jurisdictions than I am about bad regulation (however one might care to define the term ‘bad’).
In the U.S. essentially all municipal electric systems (some are very very large) are self-regulated (–> multiple regulators). Almost all, but not all, electric cooperatives are self-regulated. Wholesale tariffs are regulated by an entity (FERC) that is completely separate from the entity (state regulatory commissions) that regulates Retail tariffs – even for the same utility. So having multiple regulatory jurisdictions is not an unusual concept, in and of itself.
I’ve seen a report by the Brattle Group dated Sept 2007. It was prepared for the Edison Foundation and it appears mainly for the US market. I couldn’t find any reference to the Philippines. Are there any other references for $/kw for the Philippine market/
Anonymous: I haven’t seen any.
interesting! I sure wish we could do that too. But as of now, we have this policy on who can only give “official statements”, and we sure don’t want to be “quoted”, you know how malicious Filipinos can be. Sad but true. But I sure would love to write about the work we do. I am planning to do that when I’m no longer connected to the company. Not sure when that will be… it’s as uncertain as privatization. Hehehe…
i think this is the purpose of Grid Management Committee (GMC)and Distribution Management Committee (DMC). As far as i know, Nasecore is represented in the DMC. So are other industry stakeholders such as meralco, transco, ec’s and du’s.
hrt – I agree the GMC and DMC are designed to provide input from a consumer perspective. And I believe these Committees are sometimes active in PubCons and providing input on rule-makings. But consumer representatives are a minority on these committees, are they not? So the Committee itself, when it presents advisory input on policy issues, could squelch the consumer’s perspective or at least mitigate that perspective in deference to other interests on those Committees. And I’m not aware they’ve ever participated in a rate proceeding (though I could be wrong on that).
An entity that is entitled to be a full-blown intervenor in a rate case, focused solely on consumer issues, can be a powerful consumer lever before the ERC if adequately financed so that they can bring to the proceedings expertise equivalent to that of the utilities. Intervenors are always at an disadvantage in a rate proceeding – the utility holds many of the the cards (but not all).
Hello, I saw you there, see you again next week. Hope to chat with you then. You were rushing last time eh.
This “area” is what I’m directly working on, fyi. 
Ha ha. I was going to leave a post on your blog and say the same thing. Saw you – took me a couple of times for it to register – but you looked busy and all I could think of was “Zahflo”.
I’ll try to catch up with you next time I’m in, Lisa. What floor are you on?
12th floor.
It must very frustrating for a person like you, who’s very analytical and makes a living out of understanding & solving problems, to not fully understand what’s happening to your “digestive track”. I sincerely hope that you get well VERY soon.
Thanks, Larry. Ha. Well, I’m taking clue from Filipino culture and something Sir William Osler, a Professor of Medicine at Oxford said around the turn of the last century – “live in day-tight compartments.” Analyzing the entire past and the entire future can throw us analytical types into loops – whether it be energy or health.
Notwithstanding the biased media that you have read, stockholders have no problems getting info on meralco. It is surprising that the empty posturings of a govt crony seemed to have fooled a lot of people.
Consumers like yours truly can buy meralco stocks – it is openly traded in the market. If that is not consumer ownership, I will never know what it is.
What some people dont realize is that the govt owns NPC, and NPC is in BILLIONS of dollars in debt. The 12% eVAT on power sales is whats keeping NPC in the black.
Heaven forbid should the same thing happen to Meralco. And to be led by a person whose penchant for buying paintings with pensioner’s money is a sure invitation to disaster
Opening the ‘market’ before 70% of NPC privatization is an execise in futility. NPC will continue to dominate the market and dictate prices.
Buyers in WESM may have little to say concerning prices but they have the choice to buy or not. If these consumers opt to use their generators instead of buying from high priced WESM, then market prices are forced to drop or risk becoming obsolete.
Giving NPC (or any single entity) control of the power generation supply will result in artificial prices, either too high (as a result of greed) or too low (election prices)
Robbie – “election prices” Heh heh. I like that term.
Hmm, it has no link to ERC ah. Have you checked our new site http://www.buyyourelectricity.com.ph ?
Zahflo – Yes, I have seen it. That's going to be a helpful site. What you've already built there is helpful.
Hi! Would you know who the members of PIPPA are?
That’s actually a very good question. It came up on the very first day of Hearings when Pete Ilagan of NASECORE was pursuing this point doggedly in cross-examination of PIPPA President Pantangco. His answer got very confusing. Finally, it was agreed that he would submit a list of members that were presently current with their dues (but some firms or people are considered PIPPA members even if they are not current – i.e. they attend meetings and influence PIPPAs activities).
I never got the list. I tried to furiously write down the names he was verbally reeling off, but I couldn’t keep up.
Notably, AES/Masinloc is not a member.
But most of the NPC BOTs are, the First Gen group, and some of the PEPOA members.
Pantancgo said PIPPA represented 8,800 MW of capacity in Luzon of which 6,200 MW are IPPs of Napocor and 2011 MW are BOOs contracted to Meralco.
At first Pantangco began listing members of the Board, then shifted to listing corporate members. I’ll just list down some that I had scribbled in my notes:
First Gas (Santa Rita and San Lorenzo)
First Gen Hydro (Pan/Masiway)
Buaung Power (BOT to NPC)
Bacani – Kepco
Lopez Dee
Louis Miguel Aboitiz (Luzon Hydro, East Asia, SNAP)
Freddie Puno (Team Energy and San Roque)
Santana (Quezon Power)
Ramon Abaya (Minergy)
CBK
Alstrom Group
Trans Asia
Sir,
Thank you for reading my blogs.
Head, Wind, Canoe
Edwin, my privilege. Thanks for writing on the web. Need more engineers here.
permission
For purposes of discussion, I will refer to losses as technical and non-technical only and will not include Company Use. Back in 2004, ERC obtained the services of UP Engineering for the Segregation of Distribution System Losses. ERC wanted a professional help in determining which part of the losses is due to technical and non-technical (ie. pilferage) losses. The purpose was to benchmark the different DU's and EC's on the matter and somehow reduce the caps further and force the otherwise poor performing utilities to improve their efficiency. ERB Record would show that utilities did improve their performance after RA 7832. They used to have losses as much as 20 plus percent and all this were passed on to the customer. Now, i think only a few utility has a systems loss higher than 14 percent. In fact there are utilities with losses as low as 6 percent.
If we compare losses in first world and developed countries one will discover that losses in these countries are only around 5-6%. How come that here in the Philippines and other poor countries, its 10% or more? One conclusion we can have is that the benchmark for pure technical loss is on those figures: 5-6%. The rest is pilferage or nontechnical loss.
Aiming at technical losses lower than 5-6% is therefore economicall unviable and I will have to agree with Mr. Aboitiz. Abandon all hope.
Unlike technical loss, pilferage can be easily identified and can be corrected at a minimal cost. It is therefore always a profitable exercise. And in many ways, it also lowers the technical loss as well.
Back to the study, a simulation softwarewas was developed by UP and was used extensively by ERC to the point that utilities were required to submit actual field data that were inputted to the simulation software. Apparently, there were so many glitches that the last time I heard, the deadline for the submission of the data was again extended for another 3 years. It was previously extended for about a year. The utilities apparently are dragging their feet since whatever the result, it will end up further reduction of caps.
The ERC decision of reducing the caps NOW is a welcome development. And only after seeing just raw or initial utlity data. That is a nice shortcut approach.
However, to help utilities curb pilferage, Congress has to amend RA 7832. Right now, it's very difficult to prosecute a violator. Many times, the utility has to use dirty and illegal practices that in the end boomerangs.
On company use, ERC records would show that Company Use is benchmarked around 0.25%. My opinion is, that's a good figure to start with as a new company use cap. Many utilities with higher Company Use should be subjected to thorough investigation because it's possible that they manipulate their figures. Its very easy to audit this because Company Use is based on actual Meter consumption. All ERC has to do is to check the record of these meters. And also to check the kinds of load in the facility. I suppose an electric fan cannot use 10,000 kwhrs/month??? But probably they might…in paper.
Regardless of where you put Company Use, it will still be charged to the consumer. That's how utility business is run. Unless ERC provides incentive for utilities to lower their office consumption. This is quite long, but I hope this helps.
Arnold – thanks for the discussion.
I don't have a lot of details on the UP Engineering approach to loss segregation and the experience they had with the utilities. But it seems to me that approach has been completely ditched by ERC in their move toward PBR for the DUs and Benchmarking for the ECs. To the best of my knowledge the UP approach is not being used at all in these two new rate methodologies. Or is it? It does sound like it was data intensive – and that in itself is problematic.
Your figure for developed-country distribution technical losses of 5-6% sounds about right to me and may be a good target. But, for many rural utilities here that I've seen, that won't come without a huge investment – they run secondaries way too far (need more primary and transformers), have really bad connections (high resistance), and need more delivery points (substations) and a bunch of other stuff.
So part of the solution is to get the capital available, make sure those lending can judiciously evaluate the return opportunity of the investment, get the procurement practices elevated so that quality material is used, get the engineering and construction practices up to snuff so that that projects are designed and installed correctly, and make sure the ECs are able to get adequate rate recognition (and recovery) for the investments. Everything is linked together and it all needs to work to get the technical losses down. It's not simple.
On pilferage – I think that is a more complicated issue, that has deeply embedded and multi-faceted social aspects. Maybe it doesn't require investment, but it will probably require additional operating expenditures.
On own-use, I agree with you. And this is something that's best handled through audits. And the ERC should be doing that.
Nick – Just to make additional points
Right, they did ditch the proposed program and the PBR and the benchmarking provides new rules to the ballgame. The consolation was, they were able to get enough data for them to make their latest decision on the cap. Hence, for me, 8% for DU's and 11% for EC's is a good starting point with 6% and 9% as ideal targets for DU's and EC's respectively with the 2% tolerance to pilferage. The point is, we have to push the utilities to be responsive to the times and be more creative rather than just pass their inutility to the customers in terms of higher cost of power.
Mr. Aboitiz and Head Wind Canoe spoke about systems loss as one entity. That for me brought more confusion. I would agree with both of them if Mr. Aboitiz is referring to the technical while the latter the nontechnical component of systems loss.
I think the best approach for all utilities is to start addressing their non-technical losses before they even begin any plan of correcting their system. In many instances in my experience, overloaded substations, distribution transformers and secondary systems were relieved merely by putting check meters (load center meters) in all strategic points and addressing pilferage head on with preventive metering schemes and all out legal actions. Any sign of weakness, people will be encouraged to pilfer and there is no incentive for them to do it less but only to use more free electricity.
As both MERALCO and VECO admitted, their technical loss is only around 6%, the rest is pilferage. Limiting this to 2% is doable and is the only responsible way of doing it. Several years ago, the system loss myth is prevalent in the utility industry in that nontechnical loss is negligible. With the study on the segregation of system loss and with the international systems loss data being made available, the Philippine utility practitioners soon realized that they have not considered the nontechnical loss for so long in their distribution planning.
Indeed operating expenditures will be higher and sometimes there is a need for political will on the part of the utility to fight pilferage. But I think this is the right approach. Only when we have controlled the pilferage, will we be able to see the true technical loss, and from thereon make the necessary corrections and upgrade depending on the level of performance we want to achieve.
Interesting information, Arnold, about the UP Engineering model work and that the ERC has used it to come up with their proposed new targets. I know a PubCon is being held in Cebu Wednesday on this, I believe. Two weeks ago, while I was working with NRECA, we tried to get meeting with Wally Delmundo to get update briefing on that work but were unable to get meeting coordinated while one of their Washington based advisors was here – so it it didn't happen.
My take is that at least some of the ECs are concerned about the phase-in schedule, or lack of it, for enforcement. Certainly it takes time to get the engineering studies done, projects identified and designed, financing lined up, and capex approvals through ERC, before work can begin.
The engineering analyses that ERC used to define the targets are important and I would be interested in understanding that. There is such a wide diversity in circumstances faced in the EC sector, the ERC may need to have an exemption mechanism – my guess is that they would accommodate that as long as we're making progress on the bulk of utilities.
If putting in check meters and using heavy-handed control of pilferage significantly reduces facility overloading, then I suggest we have to stop and think a bit. Pilferage should be solved by getting people to pay for electricity usage. But if the load goes down significantly, then people that were using electricity are no longer using electricity. I would have to question what was that electricity being used for and are we, as a community, better off by denying that usage. That is partly why I said earlier that pilferage was a complex issue.
“But if the load goes down significantly, then people that were using electricity are no longer using electricity. I would have to question what was that electricity being used for and are we, as a community, better off by denying that usage. That is partly why I said earlier that pilferage was a complex issue.”
“Any sign of weakness, people will be encouraged to pilfer and there is no incentive for them to do it less but only to use more free electricity.”
We have seen people and whole barangays actually using ACU's 24/7, electric stoves and multiple washing machines for business and other power spendthrift equipment/appliances who are living in shanties and nipa huts. Things they can't afford and will not use if they are paying their electric usage.
I have seen in my practice that the common sense approach for most technical people has always been extensive and expensive technical engineering approach when the solution most of the time, not all the time, but most of the time, is simple non-technical approach. Add more substations, bigger DTs, bigger lines, etc. has always been easier and the usual approach. What we found out is that many times, the load increases with no corresponding increase on the sales.
Of course this is often likely to happen in urban centers, but with the way electricity is becoming a luxury for many parts of the country with rates between P11.00 to P15.00/kwhr, I will not be surprized if this is happening already on remote and rural areas as well where utility inspection team visibilty is unlikely especially with utility resources becoming very thin. This is further aggravated by a weak RA 7832 which seems to protect the offender rather than provide the utility with solid legal grounds for apprehension and prosecution of the said offenders.
Bottom line is, proper medication requires accurate diagnosis. The first approach is to address the Non-Technical losses. Do extensive study and provide lasting remedy by way of prevention, monitoring and prosecution. Only after, not before, will we have an accurate picture of the true technical losses. Most likely, expense will now be more affordable with better result and better system performance. My two cents opinion.
Point taken.
Also, it seems to me that a good audit should be able to determine the pilferage and own use, and therefore the technical loss. I'm just not sure of the cost of doing that vs. detailed engineering studies to get at the technical.
An audit will depend on how extensive and accurate metering is done on the whole system including the own use. By the way, own use is reported separately to ERC and can therefore be easily audited. In fact, ERC regularly orders utilities to submit under oath the different loads they include in their own use.
There are plenty of simulation planning software available in the market that can simplify engineering studies. However, in order to properly segregate losses, exhaustive metering system approach is still the best way to do it side by side with a planning software or just good up-to-date database. The cost will go heavily on the metering. Well placed energy/demand meters will detemine the energy/demand on feeders, sections and DT levels. This will in turn be matched with the total energy of customers per feeders, section and DT. This way, we get the actual (not computed or simulated) energies, demands at various strategic points. Losses can then be computed in every segment and section of the distribution system. This has always been the practice of utilities though in limited terms due to their meager resources. If a program can be made to incorporate all the readings, then we can generate a monthly report on the status of the different losses throughout the whole system. With the engineering studies or planning software simulation, we can compare the expected from the actual. But as I said, a good up-to-date, real-time database will do the job. This way, hot spots can be easily identified and where we can focus our efforts to eradicate nontechnical loss in the area. The progress and result of any correctional/preventive programs in the area can then be monitored in a monthly basis. After this, rehabilitation and upgrading of the facility will follow if still needed based on actual energy lost.
In several instances, we have discussed this approach with Prof. DelMundo but apparently, the focus of his attention is more on the theoretical computation of segregating the losses rather than finding concrete solutions to the problem which understandably is not part of the scope of his work nor of his expertise.
Heh heh. That's academicians for you.
The planning software approach needs to be widely adopted anyway. The ECs/DUs need it, along with a good up-to-date database, for …. um …. PLANNING.
I'd like to see a handful of local consultants/firms develop here that the ECs/DUs could tap into for expertise on such work so that each don't have to maintain deep expertise in these programs. It's an initiative I tried to kick off with IFC and they were interested. I think they are trying it in Mindanao on a pilot project (kick-starting use of local consultants, but not necessarily focused on planning software studies). Not sure how that's working out.
Many DU's are using SYNERGEE and EDSA. Aboitiz DU group use SYNERGEE for a long time now and they are very satisfied with its performance. There are many similarity with the UP segregation software but SYNERGEE is very powerful.
I will appreciate it very much if you can have an update on IFC c/o Jed's group on CAPEX studies for AMRECA.
Yeah, I haven't had an opportunity to meet with Jed Sevilla since the week his project was initiated. That reminds me I should try to catch up with him next time I'm back home in CdO.
I've modified the LRAC spreadsheet. Go to the spreadsheet and click on Comments to see what I've changed. The purpose is to mimic, to the best of my knowledge, how ERC would allow Visayas LRAC to be adjusted in the context of the Kepco contract. I haven't yet tried to mimic how the pricing provisions in the contract would change.
I don't know what the Globalcoal index FOB Newcastle is currently (i.e. for mid-2008) I'm simply guessing that it's about $150/ton. Anyone know?
I've updated my calculations for the Visayas LRAC forecast and the KSPC Rate forecast. The changes are described in the Comments section of the spreadsheet here. That spreadsheet is dynamic – so that link always contains my latest iterations on this.
This latest analysis shows that the LRAC will be lower than the calculated KSPC rate. So I'm now wondering if the KSPC rate has been modified from the formulas that appeared in the ERC Decision. Or maybe there's something else going on that I don't understand or see yet.
Heck, I'll just copy/paste the change notes here:
This site has been a great source of information for us in QUEZELCO I. We are currently finalizing the energy supply agreement with COCO RESOURCES INC to supply 10 MW from their biomass power plant to be located in Unisan, Quezon. The LRAC spreadsheet was timely and allowed us to agree on a simple financial model to build on and determine the price.
Bing – that is super. We have so much to do here in the EC sector, especially on power supply. No need to reinvent the wheel – build on each others work and move on.
Just use the info for what it's worth – extend it, correct it, or use it simply to get ideas for your own analysis design.
Let me know what else might be useful to put up here.
I've been invited to present to next month's PhilRECA/NAGMEC meeting on the subject of power procurement – so let your GM know if there are any questions I can answer there.
I went to Bohol sometime before it I noticed that the electricity cost there is lower compared to other parts of the Phils. Is it because of it's location or is it because there's not much establishment requiring more enrgy consumption. Anyway, if this continue, it is really ideal to retire or move to Bohol in my later years. I really love the place. I think I left my heart in Bohol as they say…
I love Bohol. I could definitely live there.
Rates are lower on (Bohol and throughout the main areas of the Visayas )than in metro Manila and Luzon in general. The ERC sets NPC rates separately by major grid – Luzon, Visayas, and Mindanao. So utilities on Bohol can buy from NPC at the Visayas rate which is lower than the rate for Luzon utilities.
If you get to Mindanao you'll find that rates are yet even lower than those in the Visayas. The cheapest NPC rates are in Mindanao.
This situation won't' remain forever. As new, incremental generation is added to the grids, the prices will approach a roughly common equilibrium. I would suggest that we could expect tariffs to escalate most rapidly in Mindanao, and least rapidly on Luzon.
Yup, I couldn't agree more. WESM is really working and making things transparent and its making everyone realize physical realities.
Yes. It's amazing how high the signal-to-noise ratio is in spite of the fact that it's a hugely inefficient market at the moment.
“…with Prof. DelMundo but apparently, the focus of his attention is more on the theoretical computation of segregating the losses rather than…” It's his job as academician.
If you are looking for solutions. Then try those who have the expertise in the application of Advance Metering Infrastructure which made SCADA obsolete.
Philip Jarina, PEE
Former ERB employee
http://philipjarina.blogspot.com/
“…Investments to reduce system losses may be higher than what you can save just to meet the cap. ..”
Investment on reducing system loss may be higher for that year's cap but still applicable to the following years' caps. Unfortunately, Aboitiz is only interested in this year's cap.
This mentality is common in Latin American countries where electricity prices are high. No wonder Malaysia, Taiwan and Singapore are laughing at us. Philippines has the world's second largest geothermal capacity. Then electricity should be Asia's cheapest.
Philip Jarina, PEE
Former ERB employee
http://philipjarina.blogspot.com/
Hi Philip. I haven't been able to participate in any of the Public Consultations on this, but my perception is that the ERC is holding pretty firm on the loss cap reductions and starting to look toward future additional reductions.
…ERC is holding pretty firm on the loss cap reductions and starting to look toward future additional reductions.
If this is true, then it's time to abolish the EPIRA Law, and abolish ERC. EPIRA Law has not serve its purpose after all.
ERC, in it's old self as ERB was never influenced by any utility specially on Electricity Pricing and System Loss Regulations. i cannot imagine how it has evolved.
Power industry in the Philippines is just the same as those in Latin American countries. It's run by Latino-style management.
Sir,
I am humbled with your work as almost free for Philippine ECs. If there is any assistance I can provide for your ECs project on system loss, I am volunteering for free.
Edwin
I would like to request for the list of Philippine Power plant
ezc6 ut -
Here's the 200DOE list in spreadsheet form: http://www.editgrid.com/user/nicknich3/DOE_List...
You can download it from that URL.
Here is my own list but I've been using but i haven't updated this is a long time: http://www.editgrid.com/user/nicknich3/Philippi...
It's already started.
Sir, I am humbled with your work as almost free for Philippine ECs. If there is any assistance I can provide for your ECs project on system loss, I am volunteering for free.
Boy does the Manila Times get it wrong here.
The headline is simply dead wrong. And neither is this correct: “regulatory commission also on Wednesday granted a petition filed by the Bureau of Trade Regulation and Consumer Protection of the Department of Trade and Industry.” That, as discussed above, was issued on November 10!
hi
g06772ti4bvwrnsw
good luck
Hi Nick, Thanks for the data! You do this for a living? Any plans to update your Philippine PP list?
Yeah, I do this for a living. But I haven't updated my power plant
list in, like, forever. Over two years. I really should do that.
- Nick
great post thanks!
Eitherways, thanks for the data…
Cheers!
Hi Nick, what do you do
I'm an individual consultant addressing Philippine electric power issues.
Thanks Nick. Actually, I`m just trying to make a good description, and some updates, as well as geographicaly mapping in google maps all the power plants that I personally visited.
Alfie – that would be huge, actually. Thanks. Everything I've got is
so out of date.
Nice Topic. I just subscribe to your blog for future update.
Can i link this post to my blog and copy a snippet?
God bless and good luck!
Recruiting Business – Yes you can link and copy as much as you wish, according to the CC license posted in footer. All I ask is attribution. Thanks.
I agree with Nancy and subscribe to your crowd-sourcing idea although I have never participated in one. Two nights of cramming for the ERC hearing in Cebu on the ERC/PSALM petition brought me to your site. I wish I had found it earlier. I was able to refer your observation about the TOU implementation of the proposed increase and noticed that the ERC PA suggested an across-the-board implementation or what they called the “peanut butter” implementation.
Upon the suggestion of the ERC Commissioner, NPC/PSALM lawyers and their witnesses agreed with some intervenors to try a non-adversarial approach to this complex and complicated issue of rate setting for power. Nancy's post and what I gathered from this blog made it easy for me to agree to the suggestion and even offered to look for a venue where virtual meetings and exchange of ideas could take place. Would this be a start of you crowd-sourcing proposal? How do we proceed? I have uploaded some NPC files at http://rpweb.ph/Uploads/erc_files/ERC_2009004RC...
My profile may also be found at http://reklamo.ph/maritimewatchkeeper/ and why I am interested in the stuff that you have here may also be explained at http://among.reklamo.ph
Yes, we have some complex work to do….
MrGam – Thanks for the comments and for the update of what happened at the Cebu Hearings. That's very helpful
I'm totally stumped by what Commissioner Reyes meant by “non-adversarial approach” but having the parties conference among themselves and then come back to subsequently continue the Hearing process is a common regulatory technique for reaching solutions.
The “peanut butter” approach to the rate design is precisely what the Napocor filing requested. In fact, their filing used that term, specifically. So it sounds as if the ERC staff is supporting the NPC approach. But I'm not sure why they would support that. And frankly it doesn't matter what the staff thinks. The Commission is perfectly capable of disagreeing with their own staff and in fact that happens surprisingly often in the U.S.
Well, I suppose this is already the start of crowdsourcing the ERC case. It may seem as if this is a conversation between two people, but I can promise you many others are reading it and already putting it to use.
There are a number of ways to better facilitate a wider exchange of ideas. We could try some. Let me think a bit. I'll propose something. Others can suggest here also. Maybe it's not too late to get something going on this case.
Actually, the Commissioner's suggestion was for the petitioners to make an effort to make a presentation of their case to the intervenors which could help in the faster resolution of issues and perhaps reduce the time spent in the formal hearings. I was the one that called it a “non-adversarial approach” because I already had in mind your crowdsourcing proposal. The hearing did bring together people that could start forming the crowd. Picking up from Nancy's message, we need to have collaborators to form the crowd and not adversaries raring to defend their positions in cyberspace.
This was also my response to Commissioner Rauf Tan's tongue-in-cheek observation during a break in the hearings when he noticed me requesting to load a file into the laptop of a PSALM officer. Jokingly, he smiled and said “That is called sleeping with the enemy.”, to which I replied, “No, this is non-adversarial engagement.”
“If I have time. I’m very busy.” actually meant “I don't want to be exposed as an ignorant and pretentious incumbent to the most important job in this department. That can jeopardize my retirement.”
Well in this case I think it's totally my fault. I'm not the best marketer in the world. Heh heh.
That depends on what you are trying to sell. Me, I'm sold to your idea of crowdsourcing the improvement of the Philippine power sector. However, I must admit that I know nothing abut crowdsourcing. I only have the elementary idea of what it can do. So, please lead the way, you got one customer that thinks he has time to spare while waiting at the “pre-departure” area – I am a senior citizen and I think time is running out on me. I have realized too late that I have wasted a lot of time being busy with things that have not produced much meaning to my life.
Re-reading one of my favorite posts from 2006 today makes me want to reconsider the name for this group. Maybe “The One Percenters” or “Pissed Off Bastards in the Pinoy Power Sector.”
Ha ha! It was an April Fool's Joke by SlideShare. They inserted two zero's in the numbers. I wasn't “totally” taken in, but then again, I guess I was.
Nick, on the other hand, ERC has the brains. If they used Twitter, that would make the rate setting process very transparent. Then they would not be able to make lightning speed decisions such as the one issued on March 23 on the reduction of the increase in the generation charge for the Visayas (reduce the increase? hmm). The hearings in Cebu ended in the afternoon of Friday and the decision was out on Monday. Could this have been done if the stenographic transcripts were posted as soon as they were fully transcribed? The posting of the decision would have been made earlier than the posting of the stenographic notes.
I have a hunch that the Commissioners, as a whole, perceive that it is not in their personal best interest for quick and full public promulgation of ALL of their Decisions, Orders, and Announcements. I think that is misguided, because the web allows us to talk about that in a way we could not do before. The sooner they move to timely disclosure, the better off for them (as well as us).
Certainly using Twitter won't make the rate setting process transparent. But it will open the door to, or put pressure on, increased transparency. At least we could get timely notifications of publicly released Announcements and Decisions. It won't prevent the Commissioner's from delaying posting certain Decisions to the web. And it won't make the Decisions themselves any more transparent than they choose to write up.
Hi Mr Nick
Can you give me the list of email addres of the power plant company in Philipinesl, especially which use coal and Diesel for source of energy, because I want to send the for them to offer coal from Indonesia
Hi Nick:
Read your post on Filipinovoices.com
When are you returning to the Philippines?
I wanted to ask you about the prospects for solar energy and home energy in the Philippines – sourcing of solar cells, possibility of manufacturing solar cells in the philippines, etc.
BongV: I'm not extremely close to the solar activities here. Here's a link to an older Businessweek article on solar manufacturing in Philippines. http://www.businessweek.com/globalbiz/content/o...
Since the Philippines has a significant (or had, before the economic crisis) electronic fabrication industry, there are support facilities for manufacturing solar cells, I would think.
I presume SunPower is still manufacturing here – they made a significant investment and had an initial capacity of about 25 MW per year, I believe.
Aid agencies continue to fund significant amounts of rural roof top systems in poor, off-grid areas. There is at least one (probably more) private operators selling rooftop systems to upscale homes.
Not bad. It is really interesting. Thanks for providing this information. will be waiting for the new ones.
hi nick
i'am connected in a company servicing motors & generators…
the company i work with is the biggest & most advance in technology here in Philippines..
can you give me some of your contacts?..
thanks…
Joe: What's the company? What's your 'connection'? What's your name?
thanks for the great information…
hello Mr. nick,
may i ask the name of the small power plants here in the Philippines and their contact numbers?
Thank you very much
fritzie
Unfortunately I don't have such a list. Try the ERC site http://www.erc.gov.ph They should have a list of power plants/companies that have been issued a COC – Certificate of Compliance.
thank you very much mr. nick, youre such a great big help.
God Bless!
Cheers!
fritzie
I think consumer's have the right to know how their goods are priced.
It's a very complicated thing for an ordinary citizen to understand but the point is that no over commercialism is practiced.
I absolutely agree.
Hi Nick,
My name is Roy Teo from Finnsonic SEA Pte Ltd, based in Singapore. We are the subsidary of Finnsonic Oy, manufacturer of cleaning machine, based in Finland. We have a range of cleaning (ultrasonic and spray) and inspection machine (fluorescent penetrant inspection line) for the power plants. Some cleaning part example as follow.
-thermal rotating equipment
-process filters
-gas turbine parts
-power plant intercoolers etc……
With your expertise in power plant in Philippines. Do you think we can work out something?
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Donny
The Loss Segregation is noble idea of a project, but unfortunately it is deeply flawed. The model does not consider source voltage measurements, source demand measurements, weather impact and loading factors, loops, wandering laterals, switching operations during the billing period covered, the load components (I/Z/PQ), neutral connection to ground for multiground systems, earth resistivity, actual conductor spacing and height, actual different phase conductors in a segment, harmonic impact, line conductor and equipment aging and deterioration among others. Most utilities looked up to heaven and then bowed their heads to create diurnal curves that did not consider variances in consumption patterns during weekday days, weekend days, and peak day of the billing period as well as the weather loading factors and coincidence factors and load pick ups. Funny, but, the thousands of Distribution transformer primary and secondary jumpers were ignored by the UP segregation software. And mind you, ERC and NEA were dragged into the sales promotion activities for the software because in 2005 (contrary to the consultant's vehement denial in his letter to the ERC that they are not promoting or selling any software!), the Segregator became available to the commercial market as DSAS. They tricked the NEA and the ERC, so it just goes to show that the guys behind the Loss Segregation were up to fatten their pocktes from a captured market.
I wonder how many electrical practitioners are in the utilities, and at the height of the loss segegation, very few raised a finger. I wonder what cowed them.
With all due respect, as I am not a PEE nor masters or doctorate degree holder in Electrical Engineering, data gathering should have been first implemented… Now data gathering involves substation and feeder metering (volts, demands, and power factor), precisely calibrated consumer energy meters and customer class load loggers. How can one run a realistic loss calculation based on load curves when there are no load loggers in the first place? And those who have one, logged data for a week on a residential class customer, then the next week on a commercial class, and so on… All because the poor guys in the utilties were sorely pressed for time to beat the submission deadline. The loss computation should also account naturally for the loads, and this is also bloody tough.. Utilities have to go from customer to customer to count the quantities and ratings of each type of electrical appliance of each customer. Customer loads naturally affect losses and the magnitude of losses depend on the load power factor. Surveying the secondary line sections and the customer service drops is no quick and easy task. The second part of the segregation is projecting the losses to five years from the base year, and such projection should be spatial or in layman's term, geographic map based. Sadly, just a few utilities have any reliable Geographic information system (GIS). Now, the issue of maps was skirted by the Segregation consultants claiming that a map is not needed in a load flow… a testament that the project proponents ignore their own guidelines.
The Segregator is very primitive compared to SynerGEE. In all aspects of power system modeling like data handling, circuit validation, objects modeled, SynerGEE is superior to the Loss segregator software. You can't use that segregator template for the Loss Segregation itself as too many factors are missing, and it would be tragic to use the segregator for CAPEX, power quality, protection, reliability and engineering economics analysis.
Pilferage is an unknown quantity, so the technical loss computation by using simulation softwares like SynerGEE is needed in the equation towards determining the extent of other losses. Simulation software is not just the only tool in loss reduction. Demand meters, thermal scanners, source meters among others are also needed. The simulation results only form a part of the basis to monitor suspected pilferers. A geo-centric model such as provided by SynerGEE fast tracks the resolving of loss contributory issues such as defective customer kwhr meters, loose connections, pilferage, switch placement, capacitor location, co-generation, etc.
Looking back, the Loss Segregation was hastily implemented for reasons subject to wild speculations. Many major loss factors were ignored. Thank God, there were few utilities and engineers who were discerning enough with their practical senses and stood firm on their ground.
Rene – thanks for weighing in on the discussion.
We need MORE of the sector's knowledgeable people to weigh in on this so we can move toward some meaningful practices in the area of loss analysis and reduction. The analysis of losses is still a HUGE problem for the DUs; well, at least for the cooperatives.
hi nick can u give some existing power plants in the philippines ?
cnt fnd t
Dear Sir,
I read your article above and wondering if what kind of power plant is being built on Bataan and what company invested on that project? Is it San Miguel or GN Power…?
Thank you!
Christian – You know, even for me, this is kind of hard to keep up with. I’m not sure who all is looking to develop on Bataan.
San Miguel recently bought an existing combined-cycle plant at Limay, Bataan. GN Power, last I heard, was close to starting (and may already have) a coal-fired plant at Mariveles, Bataan. And this gas-fired plant was recently brought to my attention.
to quote the article
Also keep in mind that this is the price at the plant gate. It excludes transmission charges, ancillary services, distribution utility charges and various other charges that are added into a retail electricity bill.
On my most recent Meralco bill, Meralco had added an additional P4.2/kWh for all such charges.
Does this means meralco charges you transmission rates, ancilliary charges, distributin rates and various other charges (which I presume includes the government’s eVAT of 12%) ?
Better clarify that statement first
Robbie – Ummm, yeah. If it’s on your bill, it means Meralco charged you for it. Was that your question?
All distribution utilities (like Meralco, VECO, the cooperatives, etc.) charge you their total costs of getting power from the generator to the customer meter. There’s nobody else to pay for that stuff. There is an issue of how to allocate those costs to various types of customers – but the customers, as a group, pay all the costs.
and the increases are in % terms. so a 2 peso increase on a 500 peso bill will look larger than on a 2,000 bill. since the increase is uniform across all residential customers
Hi Nick,
I’m on a transformer/insulating oil business and I,m just wondering, could you give me contacts on Philippine Power plant.
Thanks.
I remember this!!!,lucy
Hi mr. nick, i would like to ask u if u have data about the powerplants minimum stable load capacity and can i ask if what powerplants in the luzon grid are reserves..tnx
Rom – I don’t have the answer to either of those. Sorry.
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