The Mindanao Power Crisis: Causes

and Solutions

David A. Tauli
Senior Vice President
Cagayan Electric Power & Light Co., Inc.
CEPALCO

A Discussion for the Lanao Power Consumers Federation

Iligan City, March 23, 2010
 Outline of Presentation
•  What is the Mindanao power crisis?
•  What caused the Mindanao Power Crisis?
•  What did NOT cause the Power Crisis?
•  What are the solutions to the Mindanao Power
Crisis?
•  Who can carry out the solutions to the Mindanao
power crisis?
•  Why are NPC and PSALM not carrying out the
solutions?
•  What can we do to make the NPC-PSALM act on the
solutions and end the power crisis?
What is the Mindanao Power Crisis?
Supply and Demand Situation for
NPC Power Plants in Mindanao

From NGCP Presentation

Mindanao Power Stakeholders Meeting
Feb. 18, 2010, Davao City
 HYDRO PLANTS’ AVERAGE & PEAKING CAPABILITY
AS FEBRUARY 11, 2010

HYDRO PLANT INSTALLED AVERAGE PEAKING

CAPACITY, MW CAPABILITY, MW CAPABILITY, MW

Agus 1 HPP 80 25 30

Agus 2 HPP 180 60 65

Agus 4 HPP 158 75 100

Agus 5 HPP 55 20 27

Agus 6 HPP 200 100 140

Agus 7 HPP
54 20 30

Pulangi HPP 255 50 85

Total 982 330 477

HYDRO PLANTS’ PEAKING CAPABILITY CAN SUSTAIN ONLY FOR ABOUT 2 HOURS
 THERMAL PLANTS’ INSTALLED & PEAKING CAPABILITY
AS FEBRUARY 11, 2010

INSTALLED PEAKING
THERMAL PLANT CAPACITY, MW CAPABILITY, MW

APO GEO 1 & 2 100 93

PB 104 32 16

PB 117 (Sold by NPC!) 0 0

PB 118 (Sold by NPC!) 0 0

SPPC 50 50

WMPC 100 90

STEAG 210 210

Total, Non-Hydro 492 459

 Summary of NPC Supply and
Demand, as of February 11, 2010
•  Total Peaking Capacity for Hydro and
Non-Hydro Plants of NPC: 936 MW
•  Total Contracted Demand by NPC
Customers, March 2010: 1,363 MW
•  Shortfall in Peaking Capacity of NPC of
427 MW (31%) on Feb. 11, 2010
•  Therefore: Daily Power Curtailments
What is the Mindanao Power Crisis?

•  The Mindanao power crisis is the

ongoing brownouts and power
curtailments throughout Mindanao
directly due to the lack of power and
energy from the power plants owned or
controlled by the National Power
Corporation, particularly the
hydroelectric plants on the Agus River.
What Caused the Mindanao Power
Crisis?
What did NOT cause the Mindanao
Power Crisis?
•  Not due to El Niño; it is man-made, the
result of actions (and inaction) over
many years in the O&M of NPC power
plants in Mindanao.
•  Not a ploy to increase power rates in
Mindanao
•  Not a sinister plot to sabotage the
elections
 Major Direct Cause of Mindanao
Power Crisis
•  Lowering of water-surface elevation of
Lake Lanao to an abnormal year-end
level in 2009, resulting in drastically
reduced generation from the hydro
plants on the Agus River
Profile of power plants on the Agus River
Panoramic View of Lake Lanao
Agus River Diversion Dam
 LAKE LANAO WATER ELEVATION (NGCP)
702.00

701.50

701.00
2009 Rule Curve

700.50

700.00

2010 1998
699.50

699.00
699.27 Feb 16, 2010

698.50 699.01 May 08, 1998

698.00

697.50
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2009 2010 1998 RC 2010

2006

2007

2005
 Lake Lanao Daily Elevation
Drought Years 1997, 1998, 2003
Lake Lanao Year-End Elevation
1994 - 2009
Consequence of Abnormally Low
Year-End Elevation of Lake Lanao
•  Lake Lanao water-surface elevation reached
2009 YE level of 699.55 meters, about one
meter lower than the lowest year-end level
since 1994 of 700.53 m.
•  The consequent reduction in outflow from
Lake Lanao resulted in an average capacity
of the Agus hydro plants of 300 MW as of
Feb. 11, 2010, compared with their declared
dependable capacity of 588 MW, a reduction
of 49 percent in the generation of the Agus
hydro plants.
 Other Direct Causes of the
Mindanao Power Crisis
•  Reduced operating capacity of Agus 2
Hydroelectric Power Plant: from 180
MW to 60 MW average
•  Reduced peaking capacity of Pulangi 4
Hydroelectric Power Plant: From 255
MW to 85 MW
 Other Direct Causes of the
Mindanao Power Crisis … 2
•  Non-operational units of Iligan Diesel
Power Plant 1 & 2: installed capacity of
108 MW; contributed an average of 1.3
MW to the Grid in 2009
•  Privatization of Power Barges 117 and
118: reduced by 200 MW the capability
of NPC to supply the demand of their
Mindanao customers
We know WHAT caused the power crisis.
From which we can know WHO caused
the power crisis.
But WHY did they make it happen?
 Why did NPC-PSALM behave as
they did to cause the power
crisis?
•  Not because of incompetence in the
operations of power plants; not
mismanagement; not irresponsibility; but
maybe care-lessness on the part of NPC
managers.
•  Because PSALM focused on maximization of
short-term profits of NPC (attained through
the operating rule in Mindanao of minimizing
the operations of diesel-fuelled power plants)
Is there any thing anyone can do to
end the Mindanao Power Crisis?
 What are the solutions to the
Mindanao Power Crisis?
•  The Six Projects, including: Obtaining
and connecting to the Mindanao Grid
additional generation capacity (400
MW) for the Mindanao Grid from other
power plants (embedded generators,
generators from Luzon or Visayas, and
generators imported from abroad)
Other Projects to Solve the Short-
term Power Problem
•  Rehabilitation and operation of the NPC-
owned Iligan Diesel Power Plants 1 and 2 to
their full capability of around 100 MW.
•  Operation of the Power Barges 117 and 118
as base-load power plants, rather than as
supplier of ancillary services to the NGCP, in
order that the power barges can supply
maximum generation to the Grid, and the
costs of generated electricity from the power
barges will not be excessive.
Other Projects to Solve the Short-
term Power Problem … 2
•  Dredging of the forebay of the Pulangi 4
Hydroelectric Power Plant in order to raise
the peaking capability to 255 MW from the
current peaking capability of 85 MW or less.
•  Rehabilitation of various hydroelectric power
plants on the Agus River to restore the power
plants to their full dependable capability.
•  Dredging of the Balo-i Plains to enable
operation of the Agus 2 HEPP to the full rated
capability of 180 MW from the current
dependable capability of 60 MW.
Who can carry out the solutions to
the Mindanao power crisis?
The National Power Corporation (NPC), and the
Power Sector Assets and Liabilities
Management Corporation (PSALM).

The NPC-PSALM are morally (even legally)

obligated to carry out the solutions because
they caused the power crisis.
WHY are NPC-PSALM very reluctant to
carry out the Solutions?
The NPC and PSALM are not carrying out the
solutions to end the Mindanao Power Crisis
because implementation will require NPC-
PSALM to spend billions of pesos, and
recovery by NPC-PSALM of the money spent
will be slow and uncertain. (One reason for
uncertain recovery of their expenses is
because they have not unbundled their basic
rates into hydro and non-hydro components.)
What can we do to prod NPC-
PSALM into carrying out their
responsibility and obligation to
their power customers in
Mindanao?
 What Can We Do?
•  Apply public pressure on NPC-PSALM
to carry out their moral obligation to end
the power crisis which resulted from
their own actions and inaction.
•  NPC customers (particularly the
distribution utility companies) to file
class suit against NPC for failure to
deliver power contracted from them.
Questions and Comments