Kaiser Merz C.

Marcelino OPEMAN S30/2nd Term SY13-14 Traditional Power Systems (Parts of a power system)

Transmission System

Power Transformer

Bulk Power Generation

Subtransmission System Distribution Substation

Delivery Point Substation Industrial Consumer

Consumers
Commercial Consumer

Distribution System

Embedded Power Generation

Residential Consumer Figure No.1 Typical Electric Power Systems Traditionally, the Electric Power System is composed of four (4) major parts: the Generation, Transmission Network, Distribution Network and Consumers or the End-Users. However, in recent years with the unbundling of the electric power industry the generators or power generation units can now be connected in the distribution system of an electric utility either at the sub-transmission level or at the distribution level. Generation System, it is where the power is being converted from mechanical power to electrical power and thus supplies the whole electrical system. Conventionally, the Generation part is controlled or monopolized by the Government or by the State. Here in the Philippines, prior to the de-regulation, the National Power Corporation (NAPOCOR) a state-owned Corporation mostly controlled and operated the Power Generating Stations located in various places within

the country (NAPOCOR, 2008).

Furthermore, the selling price of the electric power are

controlled and set by the State which in return the State subsidizes the price of the true cost of generating electric power which can be an added cost for the State. In this condition, the other private investors operating its power generating stations are forced to shutdown due to the controlled and set price. Furthermore, it does not promote competition and the foreign or local private investor does not see the power generation sector to be profitably viable. In the past, NAPOCOR operates various power generating plants/stations which are Oil-based Power Stations, Reservoir type Hydro Dam, Mini-Hydro Power Stations, Run-off River Power Stations and Geothermal Power Stations. The Small Power Utilities Group (SPUG) is operated and maintained by the NAPOCOR. The SPUG are groups of small power generating stations, which are embedded in a Distribution Utility (DU) (SPUG, 2008). These small generating stations are usually found on isolated locations where the economic viability of installing transmission lines is costly. After the enactment of RA9136 or the Electric Power Industry Reform Act of 2001, NPC was forced to sell its power generators to private investors who are willing to operate and maintain these generators because it will lessen the burden in the government because of subsidizing the cost of power. There are still power generating units of NAPOCOR that are still unsold and are open for bidding. As indicated in the EPIRA, it will promote competition and will lower the cost of electricity. Presently, the two main sources of power are from NAPOCOR and private generating units, which they sell their electricity output through Transition Supply Contract (TSA) or the Wholesale Electricity Spot Market (WESM). The Transmission System / Network is considered as the backbone of the electric power system and it is where the electrical power is being transferred / delivered to different areas of the land or island/s via a High Voltage (HV) network or 230 kV network (TransCo, 2008). Prior to deregulation, the transmission network here in the Philippines is also monopolized by the State. The transmission system is owned and controlled by the National Transmission Company (TransCo), which is under NAPOCOR. TransCos main objective is to operate, maintain, expand and further develop the countrys power transmission system. Sub-transmission system is also operated and owned by TransCo. Sub-transmission networks are 115 kV and 69 kV transmission lines that are used by Distribution Utilities (DU) as their backbone system for their Distribution Grid. For most part of the country, 69 kV sub-transmission lines are still owned by

TransCo. For the 115 kV sub-transmission systems, some DU operated and owned this subtransmission network for their benefit. The transmission network is divided into three major grids and is named after the three main islands of the country, namely, Luzon Grid, Visayas Grid and Mindanao Grid. The System Operator (SO), under TransCo, operates the transmission system or the grid. The SO dispatches the different generators located within the country for the economic and operating constraint purposes. After the enactment of RA9136, all the assets of TransCo are transferred to the National Grid Corporation of the Philippines (NGCP). Wherein, NGCP has the right to operate, maintain and expand the transmission network for a concession period, which in this case is 25 years. The sub-transmission systems are to be transferred to different electric distribution utilities and electric cooperatives as included in the EPIRA. However, some of the sub-transmission facilities owned and operated by NGCP are still being discussed with the ERC for the proper transferring or selling of the facilities. The Distribution System is the third level or part of the electrical power system. In this level, the voltage is being converted from HV to Medium Voltage (MV) Level (1.2 kV to 34.5 kV distribution level; and 69kV and 115 kV sub-transmission level) and thus this supplies the whole Distribution Network. Furthermore, the distribution network is solely operated and owned by a single Distribution Utility (DU) in which it can be operated and controlled by a private entity, like the Manila Electric Company (MERALCO1), or by different Electric Cooperatives (ECs) in the country. The DUs has franchise rights in which they can operate in a City, Municipality or a Province where they are the sole power distributor of that franchise area. The Distribution Grid / System are usually radial which means the network or the end feeders are not looped. The different Electric Cooperatives (ECs) reports directly to the National Electrification Administration (NEA) which is a State-owned and controlled corporation committed to the ideals of Rural Electrification Program of the Government (NEA, 2005). NEA provides financial, institutional and technical assistance to these ECs. They are the ones that oversee the ECs performance. Prior to de-regulation, the Energy Regulatory Board (ERB) (presently known as Energy Regulatory Commission or ERC), has the mandate and authority for private DUs and the different ECs. At this level, we can find the fourth or last level or part of the electrical power system, the Load Consumers or the End-Users. DU has been defined as part of electric power !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1

MERALCO is the countrys largest DU.

systems that is directly managing the load end consumers and they are the representatives of the different consumer classes. Usually, consumers are the ones who buy electricity to the DU while the DU is the one ordering the electricity in bulk, which comes from the different generating stations/units. The End-Users are typically the electrical power consumers and where the voltage level is low compared to the other voltage level. The utilization voltage in this level is 220V and 110V for other countries (i.e. United States of America). The End-Users can be divided in to classes: the Industrial Consumers (Large Consumers), this type of power consumer is mostly the industrial sector which comprises of manufacturing and construction as the secondary sector after the primary sector which includes mining, agriculture and fishing. The Residential Consumers is the most common type of power consumers because everywhere you go you can see lots of residential homes and areas. The Commercial Consumers is considered as the second most common part of power consumers because it is business oriented, which includes merchant businesses, and you can find them almost everywhere. Agricultural Consumers is considered to be as the lowest power consumer. This is because Agricultural Consumers does not need major electric power in order for them to operate. Furthermore, the only thing that needs huge electric power is their processing plants that are being used for exports and preservation. Lastly, the Transportation Consumers, these power consumers usually uses electric power in operating their trains and others for charging their electric powered public vehicle. Manila Electric Company (MERALCO) Manila Electric Company (MERALCO) is the countrys largest electric distribution utility which lights up 5,189,247 customers as of 2012. Meralco covers 9,337 sq. km., which comprises 25% of the Philippine population. Meralco franchise area houses 60% of Philippine manufacturing output produced which also generates almost 50% of the Philippine Gross Domestic Product (GDP). Meralcos franchise is considered as the load center of the Philippines because Meralco accounts for 75% of Luzons and 55% of the Philippine energy sales. It is in the franchise area that the social, political and economic center of the Philippines is located (Manila Electric Company). Meralco covers the National Capital Region, Bulacan, Rizal, Cavite and parts of Batangas (Batangas City and Sto. Tomas), parts of Pampangga, parts of Laguna and Quezon.

In 2012, Meralco recorded all-time best levels in sales, operational and financial performance. Meralcos sales revenues registered P285.3 billion which is equivalent to $6.8 billion. While Meralcos market capitalization is P293.7, which is equivalent to $7.2 billion. Lastly, Meralcos system loss went down from 7.35% in 2011 to 7.04% in 2012. Also, the reported net income was P17 billion with declared earnings per share at P14.43 and P8.10 cash dividend per share. Meralco is located at Meralco Compound, Ortigas Ave., Ortigas Centre, Pasig City as the Headquartes, which covers an area of 9,337 sq. km, which includes the National Capital Region, Bulacan, Rizal, Cavite and parts of Batangas (Batangas City and Sto. Tomas), parts of Pampangga, parts of Laguna and Quezon.Meralco has a total of more than 850 circuit km of subtransmission lines2 energized at 69kV and 115 kV. Meralco also has a total of 16,270.32 circuit km of distribution lines3 and a total of 105 susbtatntionstha includes 8 delivery point substations (230 kV-115/69 kV substations), 79 sub-transmission substations (115/69 kV), 23 distribution substations (34.5 kV and below) and 5 switching substations4. Currently, Meralco has ten (10) sectors or areas that are distributed within the whole franchise area. These sectors operate and maintain all the physical parameters of Meralco such as sub-transmission and distribution lines, sub-transmission and distribution substations, poles, transformers, among others. Please note that the municipalities and cities covered by each sector is based from their divisions. These sectors are as follows and cover the following areas: 1. North Area Plaridel Sector, Valenzuela Sector and Balintawak Sector 2. South Area Alabang Sector, Sta. Rosa Sector, San Pablo Sector and Dasmarias Sector 3. Central Area Pasig Secor, Manila Sector and Rizal Sector Sub-transmission system is divided in to seven sectors; (1) Bulacan Sector; (2) Sector 1; (3) Sector 2; (4) Sector 3; (5) Laguna Sector; (6) Cavite Sector; and (7) Batangas Sector.

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2 3

According to Sub-transmission Asset Planning as of June 2013 According to Distribution Asset Planning as of June 2013 4 According to Substation Asset Planning as of June 2013.

MERALCOs Supply and Demand Chain

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Figure No. 2 Typical Supply and Demand It can be seen in Figure No. 2 the typical supply and demand chain of electricity for a distribution utility and an electric cooperative, which in this case is Meralco. Meralco sources its power from the generating companies (GenCos) that owns various power plants or generators in Luzon such as owned by NAPOCOR or NPC and IPPs. Meralco can secure its power requirement by having a Transition Supply Agreement (TSA) or Transition Supply Contract (TSC) between Meralco and the GenCos or NPC without going through WESM or Meralco can source its entire power requirement from WESM. However, Meralco sources its power requirement through a power mix coming from GenCos through TSC (both from IPP and NPC) and WESM because as mandated by RA9136, a utility or EC must source its power requirement from the WESM with a minimum of 5% of its total energy requirement. TSC is a bilateral agreement between a GenCo and an electric cooperative or private distribution utility that secures power requirement for a certain number of years or period and the price per kWh is included in the agreement or contract. TSC is somewhat like hedging, which protects the distribution utility or electric cooperative from price fluctuations. However, if the real cost of power is lower compared to the agreed price in the TSC then it would be disadvantageous to the electric utility because of the fixed price or vice versa. NPC GenCos and IPPs also participate in WESM some of their capacity as required in the EPIRA. Meralco sources its 5% of the total power requirement through WESM, which the price per kWh or MW depends on the available generating companies on an hourly basis. Also, the prices in WESM fluctuates depending on the movement of the demand and congestion in the transmission system (nodal pricing) plus a premium of 10%. GenCos and IPPs submit their bids

or prices for a specified hour at a specified demand (MW). Initially, the least cost of price to supply a demand for a specified hour will be chosen until it reaches the demand while the cost is going higher. The least cost are usually nuclear power plants, coal power plants, large hydro power plants, geothermal power plants and natural gas fired power plants, which are base power plants. However, there are times that these least cost power plants are not dispatched to meet a demand at a certain period because of congestion in the transmission system that drives the cost of electricity higher (nodal pricing and losses) or the unavailability of much of the power plants that are scheduled for maintenance. The power plants that have high price per kWh cost are diesel power plants, pondage hydro dam, renewable energy because of the high feed-in-tariff (FIT) and others. These power plants are intermittent in nature and peaking power plants. Peaking power plants are operated to meet a certain MW at certain period if all the base and intermittent power plants is not sufficient. The different sources of power have its different price per kWh depending on the fuel the power plant is being used to run. Meralco chooses its power supplier that has the least cost of power, which are Malampaya Natural Gas Power Plant, San Lorenzo and Sta. Rita Combined Gas Cycle, which are powered by natural gas, among others, which are base power generating plants because Meralco accounts for more than 75% of total sales of energy in Luzon.

Figure No. 3 Sample of 24-hr price between TSC and WESM prices

After determining all the sources of power, the ordered or the purchased power is now delivered to the distribution utility using the transmission system, which is operated by NGCP at a voltage of 230kV or 500kV. NGCP will transmit the purchased power at Meralcos delivery point substations which transforms the voltage level from 230kV to 115KV/69kV or 500kV to 115kV and the delivery point substations has a capacity from 100 MVA to several hundreds of MVA just to meet the demand of the Meralco customers, which some are connected at the subtransmission system (large industrial customers with a minimum demand of 7 MVA at 69kV and 10 MVA at 115kV). From the delivery point substations, power or electricity will transferred via the 115kV/69kV sub-transmission system of Meralco to other sub-transmission substations then it will delivered to distribution substations and transformed to 34.5kV or 13.8/13.2kV voltage level. The power is transmitted to the distribution system up to the distribution transformer, which are commonly located attached at the poles. Finally, from the distribution transformers, the voltage level is transformed to 230V, which is the utilization voltage that can be used to power our machines, equipment, television, electronic devices, among others. Sub-transmission system of Meralco are looped and have an N-1 contingency plan to make sure that enough and reliable power is being delivered to the customers at the most efficient and highly reliable supply of electricity. The distribution lines are normally radial. Meaning, the lines are not interconnected or looped. Recommendations The recommended strategy for Meralco in sourcing its power is by staying with the same sourcing scheme because if Meralco will try to build a new power plant, it will cost Meralco a lot and it will take time for the power plant to be completely being finished and operational. ERC hearings will be done if the power plant is feasible or is needed and if Meralco adhered to the provisions stated in the EPIRA and ERC regulations. Another is that feasibility will also be needed in choosing the type of fuel source and type of power plant, the location, among others. Currently, Meralco is re-entering the power generation industry by proposing various projects through its subsidiary Meralco Power Gen (MGen). It has been more than two (2) years and no power plant has been built and only proposal are set and hearings are still being done in ERC. Also environment certificate are still being processed. Large power plants are being proposed by MGen (natural gas fired power plants and coal fired power plants), which are base power plants

that have the least cost of power price per kWh. If ever a power plant becomes on-line, the additional capacity will help reduce the cost and augment the needed capacity in Luzon, which in return will lower down also the price in WESM. References NAPOCOR. (2008). Retrieved December 13, 2013, from National Power Corporation: http://www.napocor.gov.ph/ SPUG. (2008). Retrieved June 26, 2010, from Small Power Utilities Group (SPUG): http://www.spug.ph/ NEA. (2005). Retrieved June 26, 2010, from National Electrification Administration: http://www.nea.gov.ph/!! TransCo. (2008). Retrieved June 26, 2010, from National Transmission Corporation: http://www.transco.ph/