Empowering the PH: Electric Power Industry Roadmap 2017-2040

Special guests and participants, ladies and gentlemen, good morning! Thank you for inviting me today. Thanks to our host for the warm reception and the special arrangements made to ensure the success of this year’s general membership meeting.

This forum offers a good opportunity to talk about the power sector, which is crucial for any economic development. I intend to highlight the DOE’s power sector roadmap.

Without power, there can be no progress and prosperity. It is indispensable to our economic growth and our nation’s drive towards global competitiveness. Because of this, the energy sector seeks to attain its ultimate goal of energy security to hasten the government’s drive towards industrialization.

The Department of Energy, pursuant to this long-term vision and as mandated by the Department of Energy Act and the Electric Power Industry Reform Act (EPIRA) of 2001, has prepared the power development plan covering the transmission, generation and distribution sectors of the electric power industry.

Our strategic plan or the electric power industry roadmap has three main goals: to ensure quality, reliable, affordable and secure supply; to expand access to electricity; and to ensure a transparent and fair playing field in the power industry.

The roadmap focuses on four subsectors and embodies the short- term to long-term implementation of strategies formulated to respond to these overall objectives.

For power generation, we will pursue the participation of the private sector and utilize new technologies and emerging power supply sources consistent with the appropriate power mix policy. We will build energy-resilient infrastructure using advanced and efficient technologies to secure the delivery of power supply even in times of calamities. We will formulate relevant policies and regulations to ensure an attractive business climate.

The issuance of Executive Order No. 30 will help the DOE facilitate the declaration of energy projects as projects of national significance to pave the way for their timely implementation.

EO30 will do away with the tedious process of permitting and approval prior to the commercial operation of power generation projects. This will enable us to meet the required capacity to respond to the growing power demand due to increased economic activities. This will likewise help minimize the transaction costs and address tax concerns of power companies to make the cost of electricity competitive with neighboring countries.

Another policy thrust of the DOE is the institutionalization of the appropriate power mix policy for power generation. This is geared towards the achievement of the optimal portfolio to meet 24/7 electricity demand and reserve requirements with spatial and sectoral dimen- sions.

The DOE has a number of initiatives to ensure protection of the consumers. One is the implementation of the causers pay policy which is a rewards-and-penalty system, where power industry players may be held accountable for forced outages. Another is enjoining power generating facilities to undertake rehabilitation and upgrading of their power plants for maximum operation to ensure reliability of supply.

The DOE now conducts daily monitoring of the power situation. We regularly assess the performance of power generation companies to monitor efficiency in their operations. This performance assessment or benchmarking aims to review and develop policies to improve power generation. Through this assessment, the DOE formulates appropriate policies to improve even more the efficiency in the operations of these power plants. We encourage power generating facilities to comply with international standards for the construction of power plants and accreditation of contractors.

Another strategy to maximize efficiency is the formulation of a resiliency policy to ensure that power generating facilities are resilient enough to continue providing power in case of disasters.

For the transmission subsector, the DOE prioritizes the timely completion and commissioning of transmission infrastructure and the upgrading, rehabilitation and expansion of existing transmission lines, substations and related facilities.

In support of this objective, the DOE has formulated a transmission development plan (TDP) while the National Grid Corporation of the Philippines, has conducted a system impact study (SIS) to improve the operation of the transmission system and ensure its reliability and integrity. These will help address concerns on the provision of adequate reserve capacities to ensure uninterrupted power supply.

Our other activities to improve transmission system include the identification and development of new transmission backbones and alternative transmission corridors. This will help address inefficiencies and system congestion. The Visayas-Mindanao interconnection is expected to come on stream by 2020.Similar to the generation sector, the adoption of a resiliency policy in transmission sector is a priority. The DOE leads the conduct of regular performance assessment and benchmarking of transmission facilities to operate more efficiently and effectively.

On the distribution and supply side, the DOE together with the National Electrification Administration will supervise the strengthening and capacitating of distribution utilities, particularly the electric cooperatives. We are coordinating with the Energy Regulatory Commission for the formulation of appropriate policies and joint resolutions to facilitate the timely approval and implementation of distribution facility-related projects through capex provisions. This will improve the provision of services to their customers and facilitate economy of scale in their operations.

To further improve their operational and financial efficiency and good governance and address their institutional issues, the DUs, both grid and off-grid, will be subjected to regular performance assessment and benchmarking.For market development, the Philippine Electricity Market Corporation (PEMC) will provide trainings and capacity building for market participants and perform trial operation to enhance WESM design and system development. The new market management system (NMMS) is expected to be fully operational by 2018 pending the completion of software certification audit.

For WESM Mindanao, a department circular signed on May 4, 2017 launched the Wholesale Electricity Spot Market (WESM) and provides for transition guidelines. The target commercial operation is June 2018. The market intends to establish a central dispatch system to optimize available capacities. It will also provide price and other techno-economic signals that will further encourage investments in additional capacities in the region.

We will work on institutional and support mechanisms to ensure the attainment of EPIRA objectives. Among the priorities of the DOE are: 1) intensification of an IEC campaign at the grass roots level, supported by the different attached agencies and the PEMC thru conduct of focus trainings and fora; 2) improvements in WESM operations thru rules review and changes, and conduct of WESM audits, among others; 3) establishment and maintenance of DOE’s electric power database management systems; 4) capacity building for DOE personnel to ensure the dynamic nature of industry; 5) enhanced supply expansion

Poverty is the root cause why some people resort to rebellion. ~Compostela Valley Governor Jayvee Tyron Uy

planning using advance modeling tools and optimization software; and 6) ensuring compliance with the various requirements of EPIRA and related laws.

Another major area of concern is access to electricity. Consistent with our mandate to expand and accelerate access to electricity services and craft policies that will redound to a sustainable energy sector, the roadmap for missionary electrification presents a strategic direction for the development of missionary areas in terms of energy security and its associated systems; private sector investment; institutional partnerships; and operational efficiency. Seven small island and isolated grids’ (SIIGs) generation services have been privatized so far and the turn-over will eventually lead to the reduction of missionary electrification subsidy or universal charge for missionary electrification (UCME) which in turn minimizes the cost incurred by the government through the NPC-SPUG.

We will also develop a graduation policy program to rationalize and improve the UCME subsidy system and at the same time address the concerns prior to the implementation of the graduation policy.Lastly, the DOE will continue to work on expanding electricity access to all on-grid households by 2022 through various programs and projects embodied under the electrification roadmap.

In conclusion, let me emphasize that with this roadmap, we are confident that we can surmount current energy challenges. But I must point out that equally important is getting the active support of all energy stakeholders and consumers so that we can achieve energy supply security and economic competitiveness in the years ahead.

Thank you very much.

- Speech of Energy Secretary Alfonso G. Cusi

(Delivered by Undersecretary Felix William B. Fuentebella)

October 16, SEIPI 16th CEO Forum & 130th General Membership Meeting

Mindanao Ballroom, Sofitel Hotel Philippine Plaza Manila