The Department of Energy approved a gas-swapping arrangement to address the projected electricity supply shortage especially during the dry months this year.
The agreement focuses on using Malampaya gas intended for First Gas power plants to run the 1,200-megawatt Ilijan natural gas plant in Batangas owned by South Premiere Power Corp.
Government and industry sources confirmed that the DOE called a meeting on Dec. 27, 2022, with power industry representatives to create a contingency plan to ensure sufficient power supply amid forecasts of yellow alerts this year.
A DOE official said the gas-swapping arrangement is a “win-win solution where no one loses but everyone benefits” and “ease worries about power supply when demand rises in March to July.”
The agency forecasts yellow alerts or thin power supply on March 12 to 18, March 26 to April 1, April 23 to 29, the entire May, June 1 to June 10, Aug. 17 to Sept. 2, Oct. 15 to 21 and Nov. 19 to 25.
“Given DOE’s main objective to lower electricity prices, it commits to help with all government processes required to implement the gas swapping arrangement, including endorsement to ERC [Energy Regulatory Commission],” the DOE said in the minutes of the meeting,
Energy officials and representatives from Manila Electric Co., First Gas, Prime Energy and SPPC attended the meeting.
Energy Undersecretaries Sharon Garin and Rowena Guevara, together with director Irma Exconde, were present during the meeting.
Garin said the DOE supports the gas-swapping arrangement if it helps the economy.
The meeting ended with several agreements, such as First Gas proposing to run two units of the Santa Rita power plant on liquid fuel, making available to Meralco around 80 million standard cubic feet per day of Malampaya gas under the Santa Rita gas supply and purchase agreement.
The Ilijan plant could generate 400 MW to 1,000 MW from March to July under the gas supply arrangement.
First Gas said it would need two months to secure additional liquid fuel deliveries for the gas-swapping arrangement. It said energy security and consumer welfare are the primary objectives of agreeing to the swapping arrangement.
The parties also agreed to keep the cost of power to a maximum of P4 per kilowatt-hour.
They will also draw up the gas swapping agreement for submission to Prime Energy, now the operator of the Malampaya gas field.
Meanwhile, the DOE will ensure that Meralco sources energy at the least possible costs and commit to helping those involved in the gas swap arrangement secure permits and hurdle bureaucratic processes in the shortest time possible.