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Regional Economic Managers’Regional Economic Managers Briefing and Dialogue,Malacañang, Manila

JOSE RENE D ALMENDRASJOSE RENE D. ALMENDRASSecretaryDepartment of Energyp gy

Power Sector Situationer2009 Power Supply2009 Power Supply--Demand, Luzon GridDemand, Luzon Gridpp ypp y ,,

Power Demand in Luzon, 1985 Power Demand in Luzon, 1985 –– 20092009

Luzon Power Demand and Supply Outlook, 2010‐2030Luzon grid needs a total additional capacity of 11,900 MW onwards to 2030

25,000

600 MW Coal-Fired

20,000

600 MW Coal Fired (GN Power);

33.55 MW BacMan II

40.8 MW BacMan I-2

10,000

15,000

MW4.6 % AAGR

5,000 Malaya (685.83 MW) Retirement

AAGR

0

Required Additional Cap 300 300 450 450 450 500 600 650 500 650 650 650 800 650 800 900 800 900 900

Committed 41 634

Existing Capacity 10,030 10,030 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Assumption: High Demand Forecasts

Required Reserve Margin 1,646 1,701 1,774 1,865 1,944 2,038 2,135 2,235 2,327 2,432 2,541 2,656 2,775 2,900 3,031 3,167 3,310 3,459 3,615 3,778 3,949 4,127

Peak Demand 7,036 7,270 7,582 7,934 8,309 8,710 9,123 9,553 9,945 10,393 10,860 11,349 11,860 12,39412,952 13,535 14,145 14,783 15,450 16,147 16,87517,636

Luzon Power Demand and Supply Outlook, 2010‐2030

35,000

Luzon grid needs a total additional capacity of 20,450 MW onwards to 2030

MW

25,000

30,000

600 MW Coal-Fired (GN Power);

33.55 MW BacMan II

MW

15,000

20,00040.8 MW BacMan I-2

6.0 % AAGR

5,000

10,000AAGR

Malaya (685.83 MW) R ti t

0

Required Additional Cap 900 600 750 650 800 800 800 900 950 1,000 1,100 1,500 1,150 1,250 1,400 1,450 1,500 2,500 800

Committed 41 634

Existing Capacity 10,030 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Retirement

Required Reserve Margin 1,794 1,901 2,015 2,136 2,264 2,400 2,544 2,697 2,859 3,030 3,212 3,405 3,609 3,826 4,055 4,299 4,556 4,830 5,120 5,427 5,752

Peak Demand 7,665 8,125 8,613 9,129 9,677 10,258 10,873 11,526 12,217 12,950 13,727 14,551 15,424 16,349 17,330 18,370 19,472 20,641 21,879 23,192 24,583

5Assumption: 6 Percent (%) AAGR

Luzon Power Demand and Supply Outlook, 2010‐2030

40,000

Luzon grid needs a total additional capacity of 27,250 MW onwards to 2030

25,000

30,000

35,000

40.8 MW BacMan I-2

15,000

20,000

25,000

MW600 MW Coal-Fired (GN Power);

33.55 MW BacMan II 7.0 % AAGR

5,000

10,000

Malaya (685.83 MW)

0

Required Additional Cap 1,200 750 750 1,000 800 1,000 1,100 1,150 1,250 1,300 1,400 1,550 1,600 1,750 1,900 1,900 2,150 2,250 2,450

Committed 41 634

Existing Capacity 10,030 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384 9,384

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Retirement

Required Reserve Margin 1,828 1,956 2,092 2,239 2,396 2,563 2,743 2,935 3,140 3,360 3,595 3,847 4,116 4,404 4,713 5,042 5,396 5,773 6,177 6,610 7,072

Peak Demand 7,811 8,357 8,942 9,568 10,238 10,955 11,721 12,542 13,420 14,359 15,364 16,440 17,591 18,822 20,140 21,549 23,058 24,672 26,399 28,247 30,224

6Assumption: 7 Percent (%) AAGR

Energy Reform Agenda

“Energy Access for More” A key priority of government to mainstreamA key priority of government to mainstream

access of the greater majority to reliable energy services and fuel, most importantly, local productivity and countryside development

E Achieve D l

Good Governance thru stakeholder participation, transparency, multi-sectoral partnership and use of ICT

Ensure Energy

Security

Achieve Optimal Energy Pricing

Develop a Sustainable Energy Plan

Regional Economic Managers’Regional Economic Managers Briefing and Dialogue,Malacañang, Manila

JOSE RENE D ALMENDRASJOSE RENE D. ALMENDRASSecretaryDepartment of Energyp gy

Pillar I: Ensuring Energy Security

STRATEGIC DIRECTION

ACTION PLANS

Short-term (2010 2011)

Medium-term (2011 2013)

Long-term (2013 2016)

g gy y

(2010-2011) (2011-2013) (2013-2016)

Accelerate the exploration and development of

oil gas and

Operationalize a one-stop-shop for upstream investment promotion and assistanceAward of exploration and

Continue awarding of exploration and development contracts for coal and petroleum

Sustain promotion and implementation of upstream oil, gas and

coal resources Award of exploration and development contracts for petroleum

o Energy Contracting Round o Direct negotiations for

for coal and petroleum to identify /firm up reserves and complement fuel supply

o Energy Contracting

of upstream activities

Frontier Areas o Publication of nominated

areasCollection and reporting of complete accurate and

Round o Direct negotiations

for Frontier Areaso Publication of

nominated areascomplete, accurate and timely oil and gas data through the International Joint Oil Data Initiative (JODI).Prudent assessment of current S i C t t

nominated areasConduct of research on new technologies on hydrocarbon (i.e. CBM, EOR/IOR/CCS)

Service Contracts.


STRATEGIC DIRECTION

ACTION PLANSShort-term (2010 2011)


Long-term (2013 2016)

g gy y

DIRECTION (2010-2011) (2011-2013) (2013-2016)Intensify

development and utilization of rene able

Increase utilization of biofuelsIncrease domestic

bioethanol production

Increase utilization of biofuelsAdditional bioethanol

capacity of 100 million

Increase utilization of biofuelsContinue conduct of

R&D for other non food of renewable and

environment-friendly

alternative

capacity to 64 million litersIncrease use of locally-

produced alternative fuels/biofuels

Cond ct R&D for other non

capacity of 100 million litersContinue conduct of

R&D for other non-food feedstock in

R&D for other non-food feedstock in coordination with concerned agencies, academe & research institutions.

energy resources/

technologies

Conduct R&D for other non-food feedstock in coordination with concerned agencies, academe & research institutions.

coordination with concerned agencies, academe & research institutions.Conduct feasibility

Continue conduct feasibility of biofuels and blends for other modes of transport.Implement biofuels

Implement higher biofuelsblend from B2 to B5 and E10 to all gasoline and corresponding standards

Conduct feasibility study of biofuels and blends for air transport

Implement biofuelsblend beyond B5 and E10 and corresponding standards

Identify and promote the required infrastructure and logistics facilities to support biofuels program


STRATEGIC DIRECTION



Long-term (2013 2016)

g gy y

DIRECTION (2010-2011) (2011-2013) (2013-2016)Intensify

development and

Continuously promote the use of other alternative fuels (i.e.

Continuously promote the use of alternative fuels

Continuously promote the use of alternative fuels (i.e.

utilization of renewable

and environment-

friendly

compressed natural gas, auto liquefied petroleum gas) as well as other emerging energy technologies such as

(i.e. compressed natural gas, auto liquefied petroleum gas) and other emerging energy

compressed natural gas, auto liquefied petroleum gas) and other emerging energy technologies friendly

alternative energy

resources/ technologies

technologies such as electric vehicles in the transport sector.

emerging energy technologies

energy technologies

Expand the use of natural gas to all sectors by putting up technologies sectors by putting up natural gas infrastructure in NCR and CALABARZON.

Pillar I: Ensuring Energy SecuritySTRATEGIC DIRECTION

ACTION PLANSShort-term (2010-2011)

Medium-term (2011-2013)

Long-term (2013-2016)

Intensify development and utilization of renewable

and

Increase RE-based generation capacities Finalize all policy mechanisms

and guidelines under R bl E A t f

Increase RE-based generation capacitiesContinuing conduct of

RE resource assessment to increase potential

Increase RE-based generation capacities Continuing conduct of

RE resource assessment t i t ti l and

environment-friendly

alternative energy

Renewable Energy Act of 2008.oRenewable Portfolio Standard (RPS)oFeed in Tariff (FiT)

to increase potential sites for capacity addition Continuing conduct of

Open and Competitive

to increase potential sites for capacity addition Continuing conduct of

Open and Competitive resources/

technologiesoFeed-in-Tariff (FiT)oNet-meteringoGreen Energy Option (GEO)oRE Market (REM)/RegistrarC d t RE

Selection Process (OCSP) of awarding RE Service ContractsConvert RE Service

Contract (Pre-

p pSelection Process (OCSP) of awarding RE Service ContractsConvert RE Service

Contract (PreConduct RE resource assessment to determine potential sites for capacity additionConduct Open and

Contract (Predevelopment to commercial stage)

-- Wind (103 sites)-- Solar (4 sites)

G th l (21

Contract (Pre-development to commercial stage)

-- Wind (103 sites)-- Solar (4 sites)Conduct Open and

Competitive Selection Process (OCSP) of awarding RE Service Contracts

-- Geothermal (21 sites)

-- Hydro (392 sites)

-- Geothermal (21 sites)

-- Hydro (392 sites)


STRATEGIC DIRECTION



Long-term (2013 2016)

g gy y

DIRECTION (2010-2011) (2011-2013) (2013-2016)Enhance energy

efficiency

Achieve energy efficiency lighting system market transformationRationalize public utility vehicles in

Promote the green building rating system

and conservation

p ymajor roads, particularly EDSA.Promote energy efficient lighting technologies (Philippine Energy Efficiency Project)

Promote adoption of Energy Management St d d i Monitor the implementation of

Administrative Order 126, requiring government buildings to reduce electricity and fuel consumption by

Standard in industries under ISO 50001 framework.

10%.


STRATEGIC DIRECTION



Long-term (2013 2016)

g gy y

DIRECTION (2010-2011) (2011-2013) (2013-2016)Enhance energy

efficiency and

Conduct energy audit of DOE attached agencies.Promote and strengthen Energy

conservationg gy

Service CompaniesEstablish energy benchmark in the manufacturing and building sector.Explore market transformation towards energy efficiency for refrigerators and air-conditioners.Expand the coverage of the p gEnergy Labeling Program.


STRATEGIC DIRECTION



Long-term (2013 2016)

g gy y

DIRECTION (2010-2011) (2011-2013) (2013-2016)Put in place

reliable power supply

Address pricing and non-pricing (competitive and regulatory) issues to encourage investment

Implement WESM in Mindanao

Increase demand-side participation

More efficient use of electricity through DSMDevelop policy framework for Develop policy framework for distributed generation projects• Tap embedded generators

to augment power supplyto augment power supply• Participation of ECs in

SPUG areas


STRATEGIC DIRECTION



Long-term (2013 2016)

g gy y



Update Power Supply Contingency Plan

o Interim policy on the unprivatized

Pursue the development of non-power

assets for contingency purposes o Re-commission power plants under

preservation (e.g. Sucat, Duracom, Power Barge/Navotas)Transfer PB 101 102 and 103 to

hydro projects in Mindanao

o Transfer PB 101,102 and 103 to Mindanao once CEDC, PEDC and KEPCO power plants in the Visayas are fully operational

Initiate the upgrade/rehabilitation of Initiate the upgrade/rehabilitation of NPC plantsImplement heat rate improvement in power plants


STRATEGIC DIRECTION



Long-term (2013 2016)

g gy y



Establish and strictly monitor industry compliance to reliability standardso Develop monitoring and disclosures

Create an Independent Reliability p pp y p g

on status of generating facilitieso Reduce the forced outages rate of

generating unitso Enforce strict compliance of power

yCouncilImplement Open AccessImplement p p

plants with their annual preventive maintenance program

Rationalize NPC Supply ContractUndertake preparatory activities to

pprepaid metering

determine readiness to open access


STRATEGIC DIRECTION



Long-term (2013-2016)

Attain nationwide

electrification (Implement 90

Pursue Sitio Energization Program – on-grid

On-grid energization of 17,287 sitios

On-grid energization of 13,637 Sitios

Energize 4,000 Households using RE percent

household connection)

energization of 2,466 SitiosEnergize 4,000 Households using RE system

Energize 4,000 Households using RE

system

Improve transmission

using RE system using RE systems

Undertake the Leyte-Mindanao interconnection project transmission

and distribution systems

interconnection project Consider extending the 500-kV transmission backbone to Western Luzon and looping it with Southern Luzon via Kadampat – Hermosa –Zapote – Dasmarinas corridorPursue ASEAN Power Grid Interconnection


STRATEGIC DIRECTION

ACTION PLANSShort-term Medium-term Long-term

g gy y

DIRECTION (2010-2011) (2011-2013)g

(2013-2016)Ensure industry compliance to

quality

Operationalize marker technology to address smuggling

quality standards for products and

facilities

Expedite procurement and operation of mobile testing laboratory

Expedite procurement of LPG testing equipment

Strictly enforce importation rules

Pillar I: Ensuring Energy SecuritySTRATEGIC DIRECTION



Long-term (2013-2016)

Promote Oil Supply Security

Update oil supply contingency plano Develop emergency

response mechanism to

Develop/establish strategic oil stockpile.Provide additional oil distribution infrastructure.

Provide climate

respond to local oil supply disruptions

Improve guidelines to

Expand/upgrade oil refineries

Provide climate conducive to

investments and fair and orderly competition (to

Improve guidelines to encourage competition (e.g. GSTLF, operation permits)Clarify taxation on competition (to

expand local refining/storage/handling/distribution capability)

Clarify taxation on imported vs. locally refined petroleum products (jet fuel, intermediate products)

Pillar II: Achieving Optimal Energy Pricing

STRATEGIC DIRECTION



Long-term (2013 2016)(2010-2011) (2011-2013) (2013-2016)

Develop/ Institute optimal price setting in

Upstream/Downstream

Develop a framework for

Upstream

Develop methodology for the energy and power industries

the pricing of indigenous energy - Implement capacitybuilding to institute framework

the pricing of indigenous energy sources.

framework

Review tax issues affecting energy prices (e.g. VAT, real estate, (e.g. VAT, real estate, local taxes)

Review incentives in the upstream sector


STRATEGIC DIRECTION



Long-term (2013(2010-2011) (2011-2013) (2013-2016)

PowerRevisit fuel supply contracts in the upstream e.g.

t l hi h i b h k d ith

PowerEstablish R M k tnatural gas which is benchmarked with

international prices of oil.Resolve imposition of VAT to power rates including the impact of the LGU Code to the existing and future operations and projects of

Reserve MarketImplement of Open Accessand Retail Competitionexisting and future operations and projects of

the power stakeholders.Revisit the EPIRA provisions on :

- Lifeline rates- Mandated Rate Reduction

CompetitionStandardization of bilateral contracts

- Loan Condonation - Cross-subsidy removal

Coordinate with DILG to implement DILG-DOE Joint Circular 95-01 on the use of the National Wealth TaxReview power supply contracting/power purchasing practices of distribution utilities.


STRATEGIC DIRECTION



Long-term (2013 2016)(2010-2011) (2011-2013) (2013-2016)

PowerReview and validate the operation of distribution utilities and NGCP vis-à-vis the applicable rate methodology being adopted.Monitor compliance of NGCP to the terms and conditions of its Concession AgreementImplement Time of Use Rates and Demand Side Management (DSM) Program at the distribution Management (DSM) Program at the distribution level.Monitor and enforce market share cap for generators.Review NPC’s existing Special Rates to various Review NPC s existing Special Rates to various customers.Revisit privatization program of PSALM.Strengthen monitoring and enforcement of rules on anti-competitive behavior and unfair trade practices.


STRATEGIC DIRECTION


Medium-term

Long-term (2013-2016)( )

(2011-2013)( )

PowerProvide regulatory certainties to investors e.g. timeliness and appropriateness of rate approvals.timeliness and appropriateness of rate approvals.Upgrade PEMC facilities (hardware and software).Upgrade and improve NGCP’s transmission line facilities and DU distribution lines .Strictly enforce WESM Rules e.g. Real-time dispatch.Launch WESM in the VisayasMonitor technical regulation of players in the

t ( f i t t d d i b

Promote transparency

power sector (referring to standards in sub-station)

Downstream OilReview oil price formulas and methodologiestransparency

of oil pricesReview oil price formulas and methodologies

- Improve transparency of pricing (basis, methodology, among others)


STRATEGIC DIRECTION

ACTION PLANSShort-term Medium-term Long-term DIRECTION (2010-2011) (2011-2013) (2013-2016)

Downstream OilResolve taxation issues (DOF/BIR/BOC) e.g. duty, excise, VAT on petroleum g y, , pproducts (finished and intermediate), the biofuel chain, imported ethanol, real estate tax per BOI incentives

Advocate passage of Competition/Anti-Trust Law

Mitigate impact of high oil prices

Minimize economic leakage on the oil and public transport sectors

Pillar III: Develop a Sustainable Energy PlanSTRATEGIC DIRECTION



Long-term (2013-2016)

P E R d t OP d C Pursue Energy Legislative Agenda

•Recommend to OP and Congress the certification of Energy Bills as “Urgent” legislative measures:

- Energy Efficiency &Conservation- LPG Bill- Natural Gas BillNatural Gas Bill- Amendments to EPIRA,

Downstream Oil IndustryDeregulation Law and Biofuels

Act Review of Water Code of the Philippines with regards to protocols of water use for energy

Formulate/update energy plans and programs

Formulate and promote the Energy Reform Agenda Formulate regional energy plans

Update the Energy Reform Agenda Complete the formulation

Update Philippine Energy Plan Develop/update the p g

consistent with national and

local development

plans

g gy p(Region IV-A, Region VI and Region XI)Develop/update the National Renewable Energy Program (NREP)Update National Biofuels Program

pof other regional energy plans Develop/update the National Renewable Energy Program (NREP)

d i l i f l

p/ pNational Renewable Energy Program (NREP)Update National Biofuels ProgramC d l Update National Biofuels

ProgramConduct Plan Implementation Review

Conduct Plan Implementation Review

Pillar III: Develop a Sustainable Energy Plan

STRATEGIC DIRECTION



Long-term (2013-2016)

Strengthen policy

researches and studies in

•Conduct of policy research on nuclear energy for power generation

•Conduct a climate change

•Implement a National Nuclear Power Program

•Facilitate the operation of a 2,000 MW nuclear power plant in 2025

aid of executive

and legislative

action

vulnerability assessment of energy resources and facilities.

•Formulate an energy sector-wide climate change adaptation strategy

•Monitor the implementation of the Climate Change Adaptation Strategy

action strategy Revitalize partnership with the Affiliated Renewable Energy Centers (ARECs) and

th t t ll d other state colleges and universities for continuing research , development and deployment of emerging renewable energy renewable energy technologies (wind, solar, ocean, etc.)

Pillar III: Develop a Sustainable Energy Plan

STRATEGIC DIRECTION

ACTION PLANSShort-term Medium-term Long-term DIRECTION (2010-2011) (2011-2013)

g(2013-2016)

Interface with Stakeholders for

a more

Enhance stakeholders’ participation in all energy initiatives

Establish Energy-sector Knowledge

Empower the LGUs to manage their own power-generating a more

participative delivery of

energy service

initiatives

Remove Red Tape by streamlining issuance of permits and licenses and

Knowledge Management portal

power generating requirements in support of their respective economic development

institutionalizing the Citizens’ Charter

- Issues on RDC/LGU endorsement

I DENR/NCIP

agenda

- Issues on DENR/NCIP certification

- Issues on Energy SalesAgreement

Doe

Documents

mw coal

mw bacman

mw retirement0

gn power mw

petroleum o energy

fuel supply o energy

e energy security

optimal energy pricing