Regional Economic Managers’

Managers
Briefing and Dialogue,
Malacañang, Manila

JOSE RENE D D. ALMENDRAS

Secretary
Department
p of Energy
gy
 Power Sector Situationer
2009 Power Supply-
Supply
pp y-Demand,, Luzon Grid
Power Demand in Luzon, 1985 – 2009
 Luzon Power Demand and Supply Outlook, 2010‐2030
Luzon grid needs a total additional capacity of 11,900 MW onwards to 2030

25,000
600 MW Coal
Coal-Fired
Fired
(GN Power);
33.55 MW BacMan II
20,000

40.8 MW BacMan I-2

15,000

MW
4.6 %
10,000
AAGR

5,000
Malaya (685.83 MW)
Retirement

0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
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
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 12,394 12,952 13,535 14,145 14,783 15,450 16,147 16,875 17,636

Assumption: High Demand Forecasts

 Luzon Power Demand and Supply Outlook, 2010‐2030
Luzon grid needs a total additional capacity of 20,450 MW onwards to 2030
35,000

MW 30,000

25,000
600 MW Coal-Fired (GN Power);
33.55 MW BacMan II
20,000
40.8 MW BacMan I-2

15,000
6.0 %
AAGR
10,000

5,000
Malaya (685.83 MW)
R ti
Retirementt
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

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
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

Assumption: 6 Percent (%) AAGR

5
 Luzon Power Demand and Supply Outlook, 2010‐2030
Luzon grid needs a total additional capacity of 27,250 MW onwards to 2030
40,000

35,000

30,000

40.8 MW BacMan I-2

25,000
600 MW Coal-Fired (GN Power);
MW 20,000 33.55 MW BacMan II
7.0 %
15,000
AAGR
10,000

5,000
Malaya (685.83 MW)
Retirement
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
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
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

Assumption: 7 Percent (%) AAGR

6
 Energy Reform Agenda

“Energy Access for More”

A key priority of government to mainstream
access of the greater majority to reliable energy
services and fuel, most importantly, local
productivity and countryside development

Good Governance thru stakeholder participation, transparency,

multi-sectoral partnership and use of ICT

Achieve
Ensure
E Develop
D l a
Optimal
Energy Sustainable
Energy
Security Energy Plan
Pricing
Regional Economic Managers’
Managers
Briefing and Dialogue,
Malacañang, Manila

JOSE RENE D D. ALMENDRAS

Secretary
Department
p of Energy
gy
 Pillar I: Ensuringg Energy
gy Securityy
ACTION PLANS
STRATEGIC
DIRECTION Short-term Medium-term Long-term
(2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013 2016)
(2013-2016)
Accelerate the ƒ Operationalize a one-stop- ƒ Continue awarding of ƒ Sustain
exploration and shop for upstream investment exploration and promotion and
development of promotion and assistance development contracts implementation
oil gas and
oil, ƒ Award of exploration and for coal and petroleum of upstream
coal resources development contracts for to identify /firm up activities
petroleum reserves and
o Energy Contracting Round complement fuel supply
o Direct negotiations for o Energy Contracting
Frontier Areas Round
o Publication of nominated o Direct negotiations
areas for Frontier Areas
ƒ Collection and reporting of o Publication of
complete accurate and
complete, nominated areas
timely oil and gas data ƒ Conduct of research on
through the International Joint new technologies on
Oil Data Initiative (JODI). hydrocarbon (i.e. CBM,
ƒ Prudent assessment of current EOR/IOR/CCS)
S
Service
i C
Contracts.
t t
 Pillar I: Ensuringg Energy
gy Securityy
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013 2016)
(2013-2016)
Intensify Increase utilization of biofuels Increase utilization of Increase utilization of
development ƒIncrease domestic biofuels biofuels
and utilization bioethanol production ƒAdditional bioethanol ƒContinue conduct of
of renewable
rene able capacity to 64 million liters capacity of 100 million R&D for other non-food
non food
and ƒIncrease use of locally- liters feedstock in coordination
environment- produced alternative ƒContinue conduct of with concerned
friendly fuels/biofuels R&D for other non-food agencies, academe &
alternative feedstock in research institutions.
energy ƒ Conduct
Cond ct R&D for other non- non coordination with ƒContinue conduct
resources/ food feedstock in concerned agencies, feasibility of biofuels and
technologies coordination with concerned academe & research blends for other modes of
agencies, academe & institutions. transport.
research institutions. ƒConduct feasibility ƒImplement biofuels
ƒImplement higher biofuels study of biofuels and blend beyond B5 and E10
blend from B2 to B5 and E10 blends for air transport and corresponding
to all gasoline and standards
corresponding standards
ƒIdentify and promote the
required infrastructure and
logistics facilities to support
biofuels program
 Pillar I: Ensuringg Energy
gy Securityy
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013 2016)
(2013-2016)
Intensify ƒ Continuously promote ƒ Continuously ƒ Continuously
development the use of other promote the use of promote the use of
and alternative fuels (i.e. alternative fuels alternative fuels (i.e.
utilization of compressed natural gas, (i.e. compressed compressed natural
renewable auto liquefied petroleum natural gas, auto gas, auto liquefied
and gas) as well as other liquefied petroleum petroleum gas) and
environment- emerging energy gas) and other other emerging
friendly technologies such as emerging energy energy technologies
alternative electric vehicles in the technologies
energy transport sector. ƒ Expand the use of
resources/ natural gas to all
technologies sectors by putting up
natural gas
infrastructure in NCR
and CALABARZON.
 Pillar I: Ensuring Energy Security
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010-2011) (2011-2013) (2013-2016)
Intensify Increase RE-based generation Increase RE-based Increase RE-based
development capacities generation capacities generation capacities
and utilization ƒFinalize all policy mechanisms ƒContinuing conduct of ƒContinuing conduct of
of renewable and guidelines under RE resource assessment RE resource assessment
and R
Renewablebl E Energy AActt off to increase potential t increase
to i potential
t ti l
environment- 2008. sites for capacity sites for capacity
friendly oRenewable Portfolio addition addition
alternative Standard (RPS) ƒContinuing conduct of ƒContinuing conduct of
energy Open and Competitive Open
p and Competitive
p
resources/ oFeed in Tariff (FiT)
oFeed-in-Tariff Selection Process Selection Process
technologies oNet-metering (OCSP) of awarding RE (OCSP) of awarding RE
oGreen Energy Option (GEO) Service Contracts Service Contracts
oRE Market (REM)/Registrar ƒConvert RE Service ƒConvert RE Service
C d t RE resource
ƒConduct Contract (Pre(Pre- Contract (Pre-
(Pre
assessment to determine development to development to
potential sites for capacity commercial stage) commercial stage)
addition -- Wind (103 sites) -- Wind (103 sites)
-- Solar (4 sites) -- Solar (4 sites)
Conduct Open and
ƒConduct -- Geothermal
G th l (21
Competitive Selection Process -- Geothermal (21
sites) sites)
(OCSP) of awarding RE -- Hydro (392 sites)
Service Contracts -- Hydro (392 sites)
 Pillar I: Ensuringg Energy
gy Securityy
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013 2016)
(2013-2016)
Enhance ƒ Achieve energy efficiency lighting ƒ Promote the
energy system market transformation green building
efficiency ƒ Rationalize ppublic utility
y vehicles in rating system
and major roads, particularly EDSA. ƒ Promote
conservation ƒ Promote energy efficient lighting adoption of
technologies (Philippine Energy Energy
Efficiency Project) Management
ƒ Monitor the implementation of St d d iin
Standard
Administrative Order 126, requiring industries under
government buildings to reduce ISO 50001
electricity and fuel consumption by framework.
10%.
 Pillar I: Ensuringg Energy
gy Securityy
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013 2016)
(2013-2016)
Enhance ƒ Conduct energy audit of DOE
energy attached agencies.
efficiency and ƒ Promote and strengthen
g Energy
gy
conservation Service Companies
ƒ Establish energy benchmark in the
manufacturing and building
sector.
ƒ Explore market transformation
towards energy efficiency for
refrigerators and air-conditioners.
p
ƒ Expand the coverage
g of the
Energy Labeling Program.
 Pillar I: Ensuringg Energy
gy Securityy
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013 2016)
(2013-2016)
Put in place ƒ Address pricing and non-pricing ƒ Implement
reliable power (competitive and regulatory) WESM in
supply issues to encourage investment Mindanao
ƒ Increase demand-side
participation
9 More efficient use of
electricity through DSM
9 Develop policy framework for
distributed generation
projects
• Tap embedded generators
to augment power supply
• Participation of ECs in
SPUG areas
 Pillar I: Ensuringg Energy
gy Securityy
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013 2016)
(2013-2016)
Put in place ƒ Update Power Supply Contingency ƒ Pursue the
reliable power Plan development
supply o Interim policy on the unprivatized of non-power
assets for contingency purposes hydro projects
o Re-commission power plants under in Mindanao
preservation (e.g. Sucat, Duracom,
Power Barge/Navotas)
o Transfer PB 101,102
101 102 and 103 to
Mindanao once CEDC, PEDC and
KEPCO power plants in the Visayas
are fully operational
ƒ Initiate the upgrade/rehabilitation of
NPC plants
ƒ Implement heat rate improvement in
power plants
 Pillar I: Ensuringg Energy
gy Securityy
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013 2016)
(2013-2016)
Put in place ƒ Establish and strictly monitor industry ƒ Create an
reliable compliance to reliability standards Independent
power supply
p pp y o Developp monitoring g and disclosures Reliability
y
on status of generating facilities Council
o Reduce the forced outages rate of ƒ Implement
generating units Open Access
o Enforce strict compliance
p of p
power ƒ Implement
p
plants with their annual preventive prepaid
maintenance program metering
ƒ Rationalize NPC Supply Contract
ƒ Undertake preparatory activities to
determine readiness to open access
 Pillar I: Ensuring Energy Security
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010-2011) (2011-2013) (2013-2016)
Attain ƒ Pursue Sitio ƒ On-grid ƒ On-grid energization of 13,637 Sitios
nationwide Energization energization
electrification Program – on- of 17,287
(Implement 90 grid sitios ƒ Energize 4,000 Households using RE
percent energization of system
household 2,466 Sitios ƒ Energize
connection) ƒ Energize 4,000 4,000
Households Households
using RE system using RE
systems

Improve ƒ Undertake the Leyte-Mindanao

transmission interconnection project
and distribution ƒ Consider extending the 500-kV
systems transmission backbone to Western
Luzon and looping it with Southern
Luzon via Kadampat – Hermosa –
Zapote – Dasmarinas corridor
ƒ Pursue ASEAN Power Grid
Interconnection
 Pillar I: Ensuringg Energy
gy Securityy
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
g
DIRECTION
(2010-2011) (2011-2013) (2013-2016)
Ensure industry ƒ Operationalize marker technology
compliance to to address smuggling
quality
standards for ƒ Expedite procurement and
products and operation of mobile testing
facilities laboratory

ƒ Expedite procurement of LPG

testing equipment

ƒ Strictly enforce importation rules

 Pillar I: Ensuring Energy Security
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010-2011) (2011-2013) (2013-2016)
Promote Oil ƒ Update oil supply ƒ Develop/establish
Supply Security contingency plan strategic oil stockpile.
o Develop emergency ƒ Provide additional oil
response mechanism to distribution infrastructure.
respond to local oil ƒ Expand/upgrade oil
supply disruptions refineries

Provide climate ƒ Improve guidelines to

conducive to encourage competition
investments and (e.g. GSTLF, operation
fair and orderly permits)
competition (to ƒ Clarify taxation on
expand local imported vs. locally
refining/storage refined petroleum
/handling/distrib products (jet fuel,
ution capability) intermediate products)
 Pillar II: Achieving Optimal Energy Pricing
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013 2016)
(2013-2016)
Develop/ Upstream/Downstream Upstream
Institute optimal
price setting in ƒ Develop a framework for ƒ Develop methodology for
the energy and the pricing of indigenous the pricing of indigenous
power industries energy energy sources.
- Implement capacity
building to institute
framework

ƒ Review tax issues

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

ƒ Review incentives in the

upstream sector
 Pillar II: Achieving Optimal Energy Pricing
ACTION PLANS
STRATEGIC Short-term Medium-term Long-term
DIRECTION (2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013
(2013-
2016)
Power Power
ƒ Revisit fuel supply contracts in the upstream e.g. ƒ Establish
natural
t l gas which
hi h is
i benchmarked
b h k d with
ith R
Reserve Market
M k t
international prices of oil. ƒ Implement of
ƒ Resolve imposition of VAT to power rates Open Access
including the impact of the LGU Code to the and Retail
existing and future operations and projects of Competition
the power stakeholders. ƒ Standardization
ƒ Revisit the EPIRA provisions on : of bilateral
- Lifeline rates contracts
- Mandated Rate Reduction
- Loan Condonation
- Cross-subsidy removal
ƒ Coordinate with DILG to implement DILG-DOE
Joint Circular 95-01 on the use of the National
Wealth Tax
ƒ Review power supply contracting/power
purchasing practices of distribution utilities.
 Pillar II: Achieving Optimal Energy Pricing
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010 2011)
(2010-2011) (2011 2013)
(2011-2013) (2013 2016)
(2013-2016)
Power
ƒ Review and validate the operation of distribution
utilities and NGCP vis-à-vis the applicable rate
methodology being adopted.
ƒ Monitor compliance of NGCP to the terms and
conditions of its Concession Agreement
ƒ Implement Time of Use Rates and Demand Side
Management (DSM) Program at the distribution
level.
ƒ Monitor and enforce market share cap for
generators.
ƒ Review NPC NPC’ss existing Special Rates to various
customers.
ƒ Revisit privatization program of PSALM.
ƒ Strengthen monitoring and enforcement of rules
on anti-competitive behavior and unfair trade
practices.
 Pillar II: Achieving Optimal Energy Pricing
ACTION PLANS
STRATEGIC
Short-term Medium- Long-term
DIRECTION
((2010-2011)) term ((2013-2016))
(2011-2013)
Power
ƒ Provide regulatory certainties to investors e.g.
timeliness and appropriateness of rate approvals.
ƒ Upgrade PEMC facilities (hardware and
software).
ƒ Upgrade and improve NGCP’s transmission line
facilities and DU distribution lines .
ƒ Strictly enforce WESM Rules e.g. Real-time
dispatch.
ƒ Launch WESM in the Visayas
ƒ Monitor technical regulation of players in the
power sectort (referring
( f i to
t standards
t d d in i sub-
b
station)

Promote Downstream Oil

transparency ƒ Review oil price formulas and methodologies
of oil prices - Improve transparency of pricing (basis,
methodology, among others)
 Pillar II: Achieving Optimal Energy Pricing
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010-2011) (2011-2013) (2013-2016)
Downstream Oil
ƒ Resolve taxation issues (DOF/BIR/BOC)
e.g.
g duty,
y, excise,, VAT on petroleum
p
products (finished and intermediate), the
biofuel chain, imported ethanol, real
estate tax per BOI incentives

ƒ Advocate passage of Competition/Anti-

Trust Law

ƒ Mitigate impact of high oil prices

ƒ Minimize economic leakage on the oil

and public transport sectors
 Pillar III: Develop a Sustainable Energy Plan
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010-2011) (2011-2013) (2013-2016)
Pursue E
P Energy • Recommend
R d to
t OP andd Congress
C
Legislative the certification of Energy Bills as
Agenda “Urgent” legislative measures:
- Energy Efficiency &Conservation
- LPG Bill
- Natural Gas Bill
- Amendments to EPIRA,
Downstream Oil Industry
Deregulation Law and Biofuels
Act
ƒ Review of Water Code of the
Philippines with regards to protocols
of water use for energy
Formulate/updat ƒ Formulate and promote the Energy ƒ Update the Energy Reform ƒ Update Philippine
e energy plans Reform Agenda Agenda Energy Plan
and pprograms
g ƒ Formulate regional
g energy
gy plans
p ƒ Complete
p the formulation ƒ Develop/update
p/ p the
consistent with (Region IV-A, Region VI and Region of other regional energy National Renewable
national and XI) plans Energy Program
local ƒ Develop/update the National ƒ Develop/update the (NREP)
development Renewable Energy Program (NREP) National Renewable Energy ƒ Update National
plans ƒ Update National Biofuels Program Program (NREP) Biofuels Program
ƒ Update
d National
i l Biofuels
i f l ƒ Conduct
C d Plan
l
Program Implementation
ƒ Conduct Plan Review
Implementation Review
 Pillar III: Develop a Sustainable Energy Plan
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
DIRECTION
(2010-2011) (2011-2013) (2013-2016)
Strengthen •Conduct of policy research •Implement a •Facilitate the
policy on nuclear energy for power National Nuclear operation of a 2,000
researches generation Power Program MW nuclear power
and studies in •Conduct a climate change plant in 2025
aid of vulnerability assessment of •Formulate an •Monitor the
executive energy resources and energy sector-wide implementation of
and facilities. climate change the Climate Change
legislative adaptation Adaptation Strategy
action strategy
ƒ Revitalize partnership with
the Affiliated Renewable
Energy Centers (ARECs) and
other
th state
t t colleges
ll andd
universities for continuing
research , development and
deployment of emerging
renewable energy
technologies (wind, solar,
ocean, etc.)
 Pillar III: Develop a Sustainable Energy Plan
ACTION PLANS
STRATEGIC
Short-term Medium-term Long-term
g
DIRECTION
(2010-2011) (2011-2013) (2013-2016)
Interface with ƒ Enhance stakeholders’ ƒ Establish Energy- ƒ Empower the LGUs to
Stakeholders for participation in all energy sector manage their own
a more initiatives Knowledge power-generating
power generating
participative Management requirements in
delivery of ƒ Remove Red Tape by portal support of their
energy service streamlining issuance of respective economic
permits and licenses and development
institutionalizing the agenda
Citizens’ Charter
- Issues on RDC/LGU
endorsement
- Issues
I on DENR/NCIP
certification
- Issues on Energy Sales
Agreement