The additional generation costs covering the period August 2006 to May 2007 will translate to an increase of P0.03 per kilowatt-hour in the utility’s rates, effective in the next billing month, until the full amount (including interest) is collected.

“Meralco already paid these generation costs to WESM on behalf of its customers. Meralco had to buy power from WESM during this period to enable it to provide continuous supply of power to its customers,” said Meralco regulatory affairs head Ronald Valles.

He explained that, “since WESM prices are determined in accordance with law and regulations, the ERC deemed these purchases from WESM as prudent and valid. To mitigate the impact, however, the ERC allowed the recovery of these costs over a three-year period. Incidentally, the generation charge is expected to go down in October.”

In September 18, 2008, Meralco had asked the ERC to reconsider its June 4, 2008 decision disallowing a portion of the generation cost it incurred for the supply months of December 2006 to May 2007 amounting to P2.7 billion.

Meralco said its purchases from the wholesale electricity spot market are in compliance with the Electric Power Industry Reform Act of 2001 and requiring the firm to limit its energy purchases from the WESM to exactly 10 percent of its total demand “would be impossible and would defeat objectives of the WESM.”

It said the disallowed P2.7 billion representing part of Meralco’s generation cost for WESM purchases in excess of the mandatory 10 percent requirement are pass-through charges and its disallowance would undermine its viability as a distribution utility.

After reviewing the legal arguments of Meralco, the ERC said it became convinced that there is merit in revisiting the legal basis cited in support of the adoption of the 10 percent cap policy and reconsidering the decision it issued in June 2008.

ERC imposed the 10 percent cap policy citing Sec. 45 of the EPIRA that for the first five years of the establishment of the WESM, “no DU shall source more than 90 percent of its total demand from bilateral power supply contracts.” WESM was established in 2006.

ERC said that since DUs are prohibited under Sec 45 (c) from contracting more than 90 percent of their total demand from power suppliers, it follows that even if the cost of power that is not sourced from bilateral contracts are higher than the transition supply rate of National Power Corp. (which is the benchmark rate), DUs committed no violation.

“Assuming that this portion is taken entirely from the WESm at prices higher than those stipulated in the DUs bilateral supply contracts with generation companies or the TSC rate and since there is no violation of Sec 23 committed for such WESM purchases, it should follow that the DUs should be allowed to recover the cost of these purchases,” ERC said.

http://www.mb.com.ph/articles/279107/erc-allows-meralco-cost-recovery

PNOC Exploration said they have awarded the drilling contract to Construction and Drilling Specialists Inc. for a total meterage of 12,800 meters. It added that the drilling of four holes have started to help determine coal reserves in the area and they have reached 1,484 meters.

The two companies were the winning bidders for six coal blocks located in Siay, Zamboanga Sibugay under coal operating contract 152. The joint venture acquired the certificate of non-coverage from the Environmental Management Bureau last year.

The parties have also conducted geologic mapping of the contract area, which includes test pitting, trenching and rock sampling while the block boundary survey was completed early this year.

PNOC Exploration officials earlier said San Miguel has expressed interest to partner with the company to develop the P5 billion mine-mouth power plant in Isabela.

San Miguel has several coal interests through its energy unit, San Miguel Energy Corporation which bought three coal companies which have coal mines in South Cotabato.

On the other hand, PNOC Exploration is the holder of COC 122 which straddles portions of Cauayan City and the municipalities of Naguilian and Benito Soliven in Isabela.

The company is the holder of COC 141, which is projected to augment the production of COC 122 in the long term. COC 141 covers an area ofd approximately 3,000 hectares in the municipality of Benito Soliven, Isabela, in the Cagayan Valley of Northern Luzon. It is adjacent to the coal areas of COC 122.

PNOC Exploration also operates coal operating contract 41 in Zamboanga Sibugay, straddling the municipalities of Malangas, Diplaha and Imelda.

http://www.mb.com.ph/articles/279115/smcpnoc-partnership-starts-coal-drilling

Almendras is part of the delegation that joined President Aquino to his US visit.

The energy chief confirmed that President Aquino was able to convince some US investors to invest into the country’s power sector.

While declining to give details on the said new energy investments from the US, Almendras said, “Yes, there are energy deals but President (Aquino) will make the announcements.”

The Aquino administration has recognized the importance of generating more capacities in the near term particularly for Mindanao.

According to a data from the Department of Energy (DOE), the Philippines needs around 16,550 megawatts (MW) of additional capacity by 2030. For Luzon grid alone, 11,900 MW additional capacity would have to be built to meet the growing demand in the next two decades.

With an estimated $1.5 million per MW, the Philippines would need about $25 billion from 2010 to 2030.

Since he took over the DOE, Almendras had recognized the need to raise more capital for the energy sector.

In his previous speeches, the DOE chief said he won’t be shy to “beg” for investments.

Recently, in a speech before Visayas stakeholders, Almendras said he had been talking with various multilateral and commercial lenders for the much-needed financial requirement to boost investments in the energy sector particularly in the promotion of renewable energy projects.

Almendras also said that he supports any move to put up baseload facilities in Mindanao.

In a statement issued while he was in the US, the energy secretary said he continuously coordinate with representatives from its DOE attached agencies, namely: National Power Corp. (Napocor), National Transmission Corp. (TransCo), National Electrification Administration (NEA), together with concessionaire National Grid Corp. of the Philippines (NGCP) in addressing Mindanao’s power concerns.

“We had an emergency meeting to discuss the current power situation as well as make preparations for the power requirements in the last quarter of the year in Mindanao. Details of proposed solutions are currently being studied due to legal and technical aspects,” Almendras said.

http://www.philstar.com/Article.aspx?articleId=615586&publicationSubCategoryId=66

ERC, in a decision, gave NEA the go signal to lend out the said amount to Siargao Island Electric Cooperative Inc. (Siarelco).

“The loan to be secured by Siarelco from the NEA will redound to the benefit of its customers in terms of continuous, reliable and efficient power supply,” the ERC said.

A known tourist destination, Siargao needs every support it could get from the government.

At present, Siarelco services the electricity needs of Siargao Island in the province of Surigao del Norte.

According to ERC, proceeds from the loan would be used by Siarelco to finance its capital expenses for the next the period 2009 to 2011

Siarelco’s capital expenditures for the three-year period include the upgrade of power lines, replacement of electric wooden poles and inefficient transformers, inter-looping of power system and the acquisition of a substation circuit breaker.

Siarelco had been complaining of lack of funds which caused the deterioration of its services to its customers.

In April this year, Siarelco said its customers had to suffer a week-long blackout due to failure of its underwater power cables.

Based on the approved loan terms with NEA, Siarelco will pay within 15 years at an initial interest rate of 4.5 percent. The succeeding rates after the first release will be nine percent per year.

NEA is an attached agency of the Department of Energy (DOE), tasked with providing financial, technical, institutional and supervisory functions over electric cooperatives.

So far, NEA had revealed over P6 billion worth of loans to a number of ECs all over the country.

There are about 119 ECs nationwide, most of them serving the far flung areas not being serviced by big power distribution utilities.

http://www.philstar.com/Article.aspx?articleId=615581&publicationSubCategoryId=66

Petron chair and CEO Ramon S. Ang recently told the Inquirer that the investment in the Refinery Master Plan (RMP) would enable the oil firm to convert the remaining black yields at the refinery into higher-margin white products.

This move will allow the company to produce more special types of gasoline and other oil products, he added.

的f we do this, our oil refinery will be more competitive than the Singapore refinery,” he added.

Originally, Petron had planned to spend initially $1 billion for the Phase II upgrade of the Bataan refinery, which was estimated to cost as much as $1.6 billion over the medium term.

Ang expressed confidence that once the Bataan refinery was upgraded, Petron would be able to post an Ebitda (earnings before interest, tax, depreciation and amortization) of $1.5 billion yearly.

Currently, the oil company has one Petro Fluidized Catalytic Cracking (PetroFCC) unit and a Propylene Recovery Unit (PRU) in the Bataan refinery, which allows it to convert more black products such as industrial fuel oil into higher-value white products, such as liquefied petroleum gas, gasoline, diesel and kerosene.

The first PetroFCC unit, inaugurated in 2008, has a conversion capacity of 19,000 barrels a day, while the PRU can produce 140,000 metric tons of propylene a year.

Even with this PetroFCC unit, however, Petron can only convert 75 percent of every barrel of crude oil to white products.

As early as 2009, the company already bared plans to construct additional refinery units including a second Petro Fluidized Catalytic Cracking Unit (PetroFCC 2) that will soon enable the full conversion of all the residual products.

http://business.inquirer.net/money/topstories/view/20100927-294507/Petron-jacks-up-budget-for-refinery-upgrade

The update shows the list consists of 21 projects for Luzon, 11 for the Visayas and four in Mindanao.

Projects for Luzon, which will total P26.5 billion, include upgrading the substations in Tayabas, Quezon and in Dasmariñas, Cavite; a new substation in Antipolo City; as well as a new substation and transmission line in Rosario, Cavite.

The biggest on the Luzon list, however, is the P2.1-billion upgrading of the 230-kilovolt (kV) Hermosa-Mexico transmission line.

Projects in the Visayas, which will cost a total of P6.69 billion, consist mainly of transmission line projects. The list includes the P1.14-billion Visayas substation reliability project and the P826-million 138-kV Ormoc-Babatngon transmission line in Leyte.

The projects for Mindanao, totaling P2.6 billion, are the 138-kV transmission line that will run from the Agus 6 hydroelectric plant in Iligan City to Aurora in Zamboanga del Sur, the 138-kV Pulangi-Kibawe Line 3 project, as well as the Mindanao substation reliability and expansion projects.

NGCP said these projects are part of the capital expenditures plans it submitted to the Energy Regulatory Commission (ERC) for the third regulatory period of 2011-2015.

NGCP also said in the report that it currently has 18 priority projects it hopes to finish within the year. Of these projects, seven are in Luzon, six in the Visayas and five in Mindanao.

The NGCP took over operations of the national electricity grid from the state-run National Transmission Corp. in 2008.

NGCP was formed after the government sold for $3.95 billion a 25-year concession to run the country’s power grid to a group led by the State Grid of China. The consortium then consisted of the State Grid of China (40%), Monte Oro Grid Resources Corp. (30%) and Calaca High Power Corp. (30%). Sy-led One Taipan Holdings Corp. bought out Monte Oro Resources last March.

http://www.bworldonline.com/main/content.php?type=4

In a statement, the company said it had signed a power supply agreement with the Pampanga utility to provide 70 to 90 megawatts (MW) of power from the Tiwi and MakBan geothermal plants.

“Part of [the company’s aims] is to have a future wherein both people and business [use] cleaner and renewable power. We are well into that future, thanks to the companies and organizations that have made the responsible choice of choosing Cleanergy,” said Aboitiz Power President and Chief Executive Erramon I. Aboitiz.

Cleanergy is the clean energy brand of Aboitiz Power.

http://www.bworldonline.com/main/content.php?id=18447

Aboitiz Power president and chief executive Erramon I. Aboitiz told reporters that the company is awaiting the go signal of the Power Sector Assets and Liabilities Management Corp. (PSALM) for privatization.

“We’re still interested in Unified Leyte, we’re interested in the [hydroelectric power plants of the National Power Corp. (Napocor)] whether it be Caliraya, Botocan, Kalayaan or the one in Mindanao, Agus, if they sell it. We’re just waiting for PSALM to continue their privatization,” said Mr. Aboitiz.

PSALM, the government body mandated by the government to privatize Napocor’s generating assets, indefinitely deferred the privatization of the 640 megawatt (MW) Unified Leyte geothermal power plants in Leyte and the 149 MW Naga power plant complex in Cebu to give more time for bidders to study new terms in the contract. PSALM is also in the process of rescheduling the rebidding of the 650 MW Malaya thermal power plant in Pililia, Rizal after the failure of the first bidding in June when only one bidder submitted its documents.

The agency said the PSALM board is still discussing the new bidding dates for the three generating assets.

Privatizing at least 70% of the Napocor’s IPPA contracts is one of the preconditions to usher in open access and retail competition in the power industry under Republic Act no. 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001. PSALM achieved 68% of this target after the sale of hydropower IPPAs last December.

PSALM breached the 70% threshold for privatization of the state’s generating assets, another precondition for open access, in July 2009 after the successful sale of the 600-MW Calaca coal-fired plant to DMCI Holdings, Inc.

The successful bidding out of any of these three assets would push the threshold for open access. Open access allows distribution utilities choice in power generation units to source its energy.

PSALM is the government body mandated by EPIRA to manage the privatization of the state’s power assets as well as to handle the liabilities of Napocor.

http://www.bworldonline.com/main/content.php?id=18383

According to Sir John Mogg, president of the Council of European Energy Regulators (CEER), “the regulatory landscape will change as a result of the global challenge of climate change, and in many countries is already changing substantially.”

He emphasized that “regulators have an important role in providing expert advice which assists policy makers in making better decisions on how to tackle clime change most effectively.”

With the industry’s structural shift, experts are noting that policy and regulatory approaches must also transform, hence, attempts at cut-and-paste decision patterns will no longer work.

“Regulation of electricity and gas – and in particular the way we encourage investments in infrastructure – can have a significant impact on our ability to connect new low carbon sources of energy and in providing information to consumers to enable them to make informed choices on things like energy saving,” the CEER chief said.

In the menu of policy and rate-setting frameworks thrown into laps of regulators are ones that underpin low-carbon investments, such as those on renewable energy projects as well energy efficiency and conservation programs. It is also worth monitoring how regulators would balance the regulatory set-up so the ‘green alternative’ can successfully infiltrate the energy domain — on the investment side and how the consumers would eventually accept the option.

Mr. Mogg added that regulators have a very crucial role “to play in encouraging companies to make the right and timely investment decisions, and in encouraging research and development.”

For any regulatory set-up to be effective and become investment-enticing though, he noted that the framework must thrive strong enough so competitive forces are stimulated to work efficiently. In the long run, he averred that consumers “wish” for cheaper prices may also roll up.

“Effective competition is the best way to ensure that over the long run consumers get the best prices. Against that background, regulators have an important role in ensuring that the market rules operate fairly and that any changes to them, or regulatory decisions based on them, are taken in an independent and predictable way,” he stressed.

The chief of the European regulatory group further opined that “uncertainty in these core areas will reduce confidence in the operation of markets and will help to drive up prices unnecessarily.”

The long-standing challenge for governments, he enthused, still rests on establishing “the confidence to ensure that regulators are truly independent, have the tools to do their job, and to resist intervention in energy markets for short-term political reasons.

The diversity of markets though exhibits a reality that there’s no “one-size-fits all” solution to the regulatory dilemmas of various jurisdictions.

“It is simplistic to think that the practices that have worked well in one country can simply be transplanted to another and that they will work just as well. The reality is much more complex. Each country has specific circumstances which can affect the way things operate – so what works in the United Kingdom may not work in Africa, for example,” he said.

http://www.mb.com.ph/articles/278503/climate-change-issue-poses-more-challenges-energy-regulators

Energy Assistant Secretary Mario Marasigan said GN Power has a pending application for a wind project with the Energy Department but the company has yet submit all requirements.

However, he declined to disclose the size of GN Power’s planned wind project “until they have submitted all application documents.”

GN Power documents showed that the planned 300 MW wind project forms part of the third phase of its integrated, multiphase electricity generating and fuel handling complex to be located on a 100 hectare site along the coast and on additional land for wind sites and pump storage in Bataan.

The firm said the “world class energy complex” will be constructed in several phases to match the projected demand growth on Luzon.

“Once completed, the project will have a diversified power generating capacity of approximately 2,700 MW, flexible transmission options, multiple fuel capability and gas through out capacity of over 100 billion cubic feet per annum, sufficient to meet a significant portion of Luzon’s forecasted power requirements in the next decade,” GN Power said.

The first phase calls for the construction of a 600 MW clean coal-fired power plant for baseload service while the second phase will be a 600 MW hydroelectric pump-storage for peak and intermediate load service.

GN Power has started construction for its coal fired power project in Mariveles, Bataan, which is expected to be completed in late 2012.

The third phase will be the 300 MW on-shore wind farm while the fourth phase will be a 1,200 MW liquefied natural gas power plant and fuel-handling facilities.

The project also involves the construction of several transmission lines for the efficient and economical evacuation of the power.

The Energy Regulatory Commission has already approved GN Power and National Grid Corporation of the Philippines’ petition for the construction of interconnection line for the coal facility estimated to cost P918.75 million.

http://www.mb.com.ph/articles/278505/gn-power-set-up-wind-energy-project-part-2700mw-complex