EPIRA) Implementation Status Report (For the Report Period April 2020)
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36th Electric Power Industry Reform Act (EPIRA) Implementation Status Report (For the Report Period April 2020) Prepared by the Department of Energy With Contributions from Energy Regulatory Commission Philippine Electricity Market Corporation National Power Corporation National Electrification Administration Power Sector Assets and Liabilities Management Corporation National Transmission Corporation TABLE OF CONTENTS I. EXECUTIVE SUMMARY ...................................................................................................... 2 II. PRIVATIZATION .................................................................................................................. 4 A. Generating Assets and Independent Power Producer (IPP) Contracts............................ 4 B. Other Disposable Assets................................................................................................. 7 C. Privatization Proceeds .................................................................................................. 13 D. Concession of the National Transmission Network ....................................................... 14 E. Sale of Sub-Transmission Assets (STAs) ..................................................................... 16 III. PSALM LIABILITY MANAGEMENT .................................................................................... 17 IV. ELECTRICITY RATES ....................................................................................................... 19 V. COMPETITION .................................................................................................................. 37 A. WESM Operational Highlights ....................................................................................... 37 B. Updates on WESM Governance Activities .................................................................... 41 C. Market Development Updates ....................................................................................... 54 D. Retail Competition and Open Access (RCOA) .............................................................. 57 E. Generating Capacity Market Share and Concentration ................................................. 60 VI. POWER SUPPLY SECURITY AND RELIABILITY.............................................................. 64 A. Peak Demand ................................................................................................................ 64 B. Status of Government Generating Assets ...................................................................... 68 C. Status of Transmission Projects ..................................................................................... 68 D. Distribution Infrastructure Projects ................................................................................. 87 VII. TOTAL ELECTRIFICATION ............................................................................................. 89 VIII. PROMOTION OF RURAL ELECTRIFICATION ................................................................ 97 IX. POLICY ISSUANCES ...................................................................................................... 99 ANNEXES Annex 1. TransCo Inspection Report Based on Concession Agreement ............................... 102 Annex 2. NGCP Related Petitions to ERC…………………………………………………………104 Annex 3. ERC Approved Capital Expenditure Projects .......................................................... 108 36th Status Report on EPIRA Implementation As of April 2020 i I. EXECUTIVE SUMMARY The 36th Status Report on Republic Act No. 9136 titled “Electric Power Industry Reform Act (EPIRA) of 2001” covers the implementation period November 2019 to April 2020. This highlights significant accomplishments, strategies and policies undertaken by the Department of Energy (DOE), the Energy Regulatory Commission (ERC), the DOE Attached Agencies as well as other private sector instrumentalities so mandated by the EPIRA. During the report period, several events occurred that deeply affected the power industry including the devastation left by Typhoon Ursula which ravaged the Northeastern Mindanao, Bicol Region, Central Visayas, CALABARZON, MIMAROPA and Western Visayas, the eruption of Taal Volcano in January 2020 which temporarily displaced about 846,000 resident of Laguna, Cavite and Batangas and the recent pandemic Corona Virus Disease (COVID-19) which put the economic activities of the country at almost stand still. Also in this report, it highlighted the response that the power sector has implemented in order to ensure the uninterrupted supply of electricity and support the government’s effort to prevent the spread and mitigate the impact of the pandemic. Amid the mobility limitation brought by implementation of Enhanced Community Quarantine (ECQ) and work from home (WFH) arrangements, the sector strived to operate normally while adhering to the norms implemented with the issuance of various regulations in line with Republic Act No. 11469 titled Bayanihan to Heal as One Act, also known as the Bayanihan Act, which was enacted on 25 March 2020 granting the President additional authority to combat the COVID-19 pandemic in the Philippines. The Department of Energy has implemented emergency measures against the COVID-19 to ensure a continuous supply of energy within the country. These include the issuance of identification cards (IDs) to facilitate movement of workers in the delivery of energy services and fuels, close coordination with other concerned government agencies and corporations including local government officials and the Philippine National Police (PNP) for the unimpeded movement of energy products and services needed for the daily operations and establishment of a 24/7 Bayanihan Energy Service hotline to assist industry players. Meanwhile, in light of their respective mandates, key energy agencies ensured their continuous operations while at the same time rendering their assistance in providing relief to the general public, as follows: 1. The ERC, while adopting a WFH arrangements, continued to monitor the proper implementation of relevant regulations particularly Among others, it has issued Advisories mandating the Distribution Utilities (DUs) to allow payment extension and staggered payments for electricity bills falling due during the period under ECQ, as well as temporary suspension of the collection of Feed-in Tariff Allowance (FIT All); 2. The Power Sector Assets and Liabilities Management Corporation (PSALM), in compliance with the DOE directives, has ensured the priority allocation of its capacities to Lanao del Sur Electric Cooperative, Inc. (LASURECO), Maguindanao Electric Cooperative, Inc. (MAGELCO) and the Ancillary Services for the entire Mindanao thereby preventing outages in the said electric cooperatives (ECs) and the grid. As to its privatization activities, it moved to later dates the conduct of biddings for its remaining assets while continuously undertaking preparatory activities under WFH. PSALM likewise allowed extension and staggered payment of bills falling due during the ECQ, in accordance with the DOE and ERC Advisories; 3. The Independent Electricity Market Operator of the Philippines (IEMOP) and the Philippine Electricity Market Corporation (PEMC) ensured the normal operations of the Wholesale Electricity Spot Market (WESM) and the Retail Market and continued the preparations for the eventual implementation of WESM Mindanao and the enhanced design for Luzon and Visayas. IEMOP adhered to the DOE’s call to allow payment extension and staggered payments to market participants whose collections from their 36th Status Report on EPIRA Implementation As of April 2020 2 consumers were affected. PEMC on the other hand, continuously conduct governance activities through online meetings; 4. The National Electrification Administration (NEA) ensured the unimpeded service delivery of electric cooperatives through issuance of IDs, implementation of business continuity plans and compliance to the different Advisories by the DOE and the ERC; 5. The National Power Corporation (NPC) ensured continuous operations in the missionary areas and implemented the DOE and ERC Advisories on extended deadline and staggered payment of electricity bills falling due during the ECQ; and 6. The National Transmission Corporation continued to monitor the adherence of its concessionaire to their respective agreements. Likewise, as FIT-All Administrator, it observed the various Advisories of the DOE and the ERC on collection deferment and extension and staggered payment to collecting entities. As a whole, the power sector accomplishments are as follows: 1. The WESM remains under normal operations albeit some incidents of market interventions implemented by the System Operator (SO) and the Market Operator (MO). The average effective supply and supply margin in the market was recorded at 13,148 MW and 2,474 MW, respectively. The lowest supply level was observed in the December 2019 billing month due to the outage of several major power plants. In terms of demand (including reserve schedule) declined by 22 percent from 11,819 MW in October 2019 to 9,259 MW in April 2020. Average demand reduction of 30% and 19% were observed respectively in Luzon and Visayas during the ECQ period. Meanwhile, average market price is at PhP3,623/MWh with the lowest rate of PhP1,494/MWh in April 2020 and highest rate of PhP5,937/MWh in December 2019; 2. Mindanao supply-demand situation shows an average demand reduction of about 25% bringing the supply-margin