Republic of the Philippines PROVINCE OF ORIENTAL MINDORO City of Calapan SANGGUNIANG PANLALAWIGAN COMMITTEE REPORT NO. 171 - 2011 -------------------------------------------------------------------------------------------------------------------------------SUBMITTED BY: COMMITTEE ON POWER AND ENERGY SUBJECT: MANIFESTATION OF HONORABLE BOARD MEMBER MARTIN S. BUENAVENTURA DURING THE 51ST REGULAR SESSION OF THE SANGGUNIANG PANLALAWIGAN OR ORIENTAL MINDORO RELATIVE TO THE FREQUENT OCCURENCES OF LONG BROWN-OUTS IN THE PROVINCE, PARTICULARLY IN THE SECOND DISTRICT FOR: THE HONORABLE PRESIDING OFFICER -------------------------------------------------------------------------------------------------------------------------------Dear Honorable Presiding Officer: The above subject was referred to the Committee on Power and Energy of Sangguniang Panlalawigan of Oriental Mindoro on June 30, 2011. Due to significance of the said matter to the lives of the people of Oriental Mindoro, Committee conducted a hearing on 07 July 2011, which was attended by following: a. b. c. d. e. f. g. h. i. j. the the the the Hon. Romeo G. Infantado, Committee Acting Chairperson; Hon. Ryan Z. Arago, Committee Member; Hon. Ramil O. Dimapilis, Committee Member; Hon. Martin S. Buenaventura, Committee Member; Hon. Gideon B. Abuel, Committee Member; Hon. Abraham R. Abas, Guest Committee Member; Atty. Kristine Grace L. Suarez, Provincial Legal Officer; Representatives from ORMECO, headed by Mr. Audel Arago, President – BOD of ORMECO; Representatives from National Power Corp. – Oriental Mindoro, headed by Engr. Maximo Delos Reyes, NPC-SPUG Superintendent; and Staff from Provincial Information Office. This Committee has the honor to report before this Honorable Body the outcome of the said legislative undertaking after thorough deliberation of the issue at hand, to wit: 1. That, the ORMECO is dependable on the following power sources: (a) Dulungan Mini-Hydro Power Plant (1.6 megawatts); (b) National Power Corporation (NPC)Agrekko – Calapan (17.0 megawatts); (c) Mirant/Global Philippines in Pinamalayan (6.0 megawatts); and, (d) NPC-Agrekko stationed in Mamburao, Occidental Mindoro (4.0 megawatts), with a total power load of 28.6 megawatts. 2. That, according to representatives from ORMECO the current power interruptions being experienced provincewide were attributable to the implementation of Annual Preventive Maintenance of transmission lines and power generators of NPC and Mirant/Global Power Corporation as well as the implementation of System Load Reduction Program of the NPC. 3. That, the schedules of power interruptions due to the implementation of Annual Preventive Maintenance were the following: a. July 2 and July 3, 2011 from 7:00 A.M. – 5:00 P.M. affecting the areas covered by the NPC’s NPC 69KV Transmission Line to wit: Naujan, Victoria, Socorro, Pola, Bansud, Bongabong, Roxas, Mansalay and Bulalacao. b. July 5, 2011 from 7:00 A.M. to 5:00 P.M. affecting the areas covered by the NPC’s 50MVA Substation, to wit: Calapan City, San Teodoro and Puerto Galera. 4. That, notably, it was revealed that the Annual Preventive Maintenance of the NPC’s 50MVA Substation in Calapan City was not conducted for reason that the NPC’s technical crew did not arrive on the scheduled date. Thus, said preventive maintenance will be re-scheduled to other date. 5. That, during the hearing, it was disclosed that even if the preventive maintenance schedules were already concluded, power shedding would still continue because of the System Load Reduction Program of the NPC. Said program is being implemented by the NPC because of its critical inventory of fuel. 6. That, likewise, due to the said critical inventory of supply of diesel for power generators, the 4.0 MW of the NPC-Agrekko stationed in Mamburao was not supplied and the power supply from Mirant/Global was trimmed down by 2.5 MW. According to the NPC, bidding for supply of diesel for their power generators in Mamburao, Occidental Mindoro failed, thus aggravating the situation. Per manifestation of Engr. Maximo Delos Reyes from NPC, their fuel allocation for April to June can be stretched out until July 5, 2011. For the third quarter, fuel allocation for the NPC – Oriental Mindoro was already bid out but, unfortunately, it covers only the months of July and August, as the NPC’s daily consumption of diesel amounts to 98,000 liters for the 28.6 MW covering the areas from Calapan to Bulalacao. The NPC-Oriental Mindoro warned that, worst come into worse, when fuel allocation for NPC-Oriental Mindoro will not realize on schedule, its power generators will all be shutting down consequently total power black outs may happen probably in September and would last until said problem has been properly addressed. 7. That, responding on the query of Honorable Martin S. Buenaventura why the NPC did not make accurate projection for the yearly consumption of fuel of their power generators, Engr. Delos Reyes clarified that the NPC-Oriental Mindoro religiously prepared and submitted the same however it was the NPC National Office who trimmed down their fuel allocation due to budgetary constraint. He said that problem on fuel allocation were being experienced not only by NPCOriental Mindoro, but also of all the provinces nationwide under the NPC-Small Power Utilities Generation. He also revealed that NPC-Oriental Mindoro is receiving the highest fuel allocations per year among all the NPC-SPUG nationwide. 8. That, the problem on fuel allocations for the NPC-SPUG begun when the Universal Charge collected from power consumers was decreased from P0.90 to P0.45. 9. That, the NPC-SPUG’s stay in the province for its missionary electrification has been long overdue as its supposed phase out was scheduled since 2004. Such delay was due to the fact that sufficient and new players in power generations in the province have not yet been assured. 10. That, on the query of the Honorable Ramil O. Dimapilis on the possibility that the Provincial government would make advances to ORMECO for its electricity consumption, which in turn the amount for such will be used to purchase the fuel allocation of NPC so as to forestall the looming problem on the supply of electricity, Atty. Kristine Grace L. Suarez said that such scheme may be allowed emphasizing its significance on the socio-economic condition of the province and its people. However, fuel allocation for the NPC Gen Sets covering one month period is amounting to Four Hundred Million Pesos. 11. That, the ORMECO, in anticipation to the NPC-SPUG phase out in the province, is forging power supply agreement with qualified independent power producers such as the ORMIN Power Corporation. ORMECO BOD President Audel Arago disclosed that agreement between the Cooperative and Ormin Power Corporation underwent Competitive Selection Process and as such the production cost of P13.0 by Ormin Power will be reduced to P6.98 per kilowatthour. The remaining production cost will be subsidized by the NPC as provided for under the Electric Power Industry Reform Act (EPIRA). In that way, BOD President Arago surmised that the said power supply agreement is advantageous to ORMECO and its member-consumers. He also revealed that under the agreement the Ormin Power will provide 6.4 MW with its four brand new modular generator sets, which are all ready for transit to the province. He also said that the said corporation successfully secured provisional authority from the Energy Regulatory Commission (ERC) for a period of six months subject to compliance on the requirements imposed by the said Commission. According to him, failure on the part of the Ormin to comply with those requirements imposed by the ERC, ORMECO is ready to terminate their agreement with said corporation. 12. That, the installation of four modular generator sets of Ormin Power is expected to be concluded by the end of September 2011 and shall be generating electricity after one month of test run. In such case, it cannot be the immediate solution to the looming problem of total power black-out in the entire province in case supply of fuel for NPC’s gen sets remains unsolved until August 30, 2011. 13. That, clarification was made regarding the Linao-Cawayan Mini-Hydro Power Plant Project. ORMECO representatives disclosed that the said project is still being implemented, which is funded through DBP loan, and is almost 85% complete. According to them, what has been dissolved was the LinaoCawayan Mini-Hydro Power Plant Corporation, which was registered under the names of ORMECO Board of Directors and officials – the same being violative of the EPIRA law. According to BOD President Audel Arago, they overlooked legal implications in registering the said corporation under their names as they only emulate the practice of other electric cooperatives. Fortunately, he said that all the documentary requirements were accomplished under the name of ORMECO; hence, the implementation, operation and maintenance of said project remains under the said cooperative. He said that the Linao-Cawayan Mini-Hydro Power Plant will be operating with an independent book of accounts since it is considered power generation utility separated from the book of accounts of the ORMECO as power supply entity pursuant to existing law. When already operational, the power cost to be imposed by the said mini-hydro power plant will be P5.25 per kilowatt-hour and, after the payment of loan in 10 – 12 year period, the said amount will be reduced to P2.22 per kilowatt/hour. 14. That, on the query of the Honorable Romeo G. Infantado on reason why said mini-hydro power plant project was not offered to businessmen in the province; BOD President Arago opined that it would be disadvantageous for the cooperative’s members-consumers to have that project be undertaken by the private investors since they are usually profit-oriented unlike the ORMECO which is service-oriented. 15. That, according to ORMECO the members-consumers were properly informed of the scheduled power shedding as they provide fliers to various offices as well as vehicles of the ORMECO with public address system were deployed provincewide. They said that they also used local media outlets in their information dissemination campaign. 16. That, on the issue of provincewide total power black-out, BOD President Arago requested to the Committee for the sponsorship of SP Resolution requesting His Excellency President Benigno Simeon C. Aquino, through the National Power Corporation (NPC) President, to prioritize the NPC-SPUG in the Province of Oriental Mindoro for the allocation of its required fuel supply and to provide in the soonest time possible its fuel allocation requirements for this year’s third and fourth quarters. He said that the ORMECO religiously and faithfully settled their accounts with the NPC and yet the cooperative is still being affected by the said problem of the NPC. 17. That, this Committee agreed that the said request has to be communicated to the Honorable Provincial Governor who, in turn, will request the Provincial Board for the passage of a resolution to that effect. In view of the same, BOD President Audel Arago said that ORMECO will make such communication to facilitate the request to His Excellency through SP Resolution. Based on the foregoing premises, this Committee respectfully recommends to this Honorable Body to terminate further consideration of the subject at hand and to wait for the request of the ORMECO, to be indorsed by the Provincial Governor, for the passage of a resolution requesting His Excellency President Benigno Simeon C. Aquino III, through NPC President, to prioritize NPC-SPUG in the Province of Oriental Mindoro in the allocation of fuel to ensure efficient and continuous operation of its power generators. (Sgd.) HON. ROMEO G. INFANTADO Temporary Chairperson MEMBERS: (Sgd.) HON. RYAN Z. ARAGO (Sgd.) HON. RAMIL O. DIMAPILIS (Sgd.) HON. MARTIN S. BUENAVENTURA (Sgd.) HON. GIDEON B. ABUEL