Presentation to the House

Committee on Energy
June 4, 2021
Forced outages are a natural and inevitable occurrence in all types of technology. The COVID-
19 pandemic made it especially difficult to address needed technical concerns such as
troubleshooting and preventive maintenance.

• Effects of Covid-19 and ECQs

o There are several planned outages in 2020 that were re-scheduled due to difficulty in
importation of spare parts and mobilization of technical personnel
o Reduced manpower of some power plants due to covid-19 infection causing difficulty in
operations
o Commercial operations date of new power plants were also delayed
o Coordinated with DOE on the issues encountered during community quarantines

• Increase in forced outage and technical difficulty of the plants may be attributable to the current
COVID-19 situation

• Coordinated with NGCP on planned maintenance outages, not to overlap with other large plants

• There are still unforeseen events like fuel restrictions and forced outages
Different plants have different roles. Peak is highest during summer because of the heat.

Sample 1-day Load Curve

11000

10500

10000

9500 peaking
9000

8500 midmerit
8000

7500

7000 baseload

6500

6000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
 Load Duration Curve - 2019
• PIPPA reiterates the need for peaking capacity for the Luzon grid
• As shown below, Luzon load curve has a steep slope which means there are only few hours that
the grid will need very high capacities (encircled portion – summer months)

2019 peak = 11,301MW

2021 peak = 11,628MW
Demand from 11,000MW to 11,301 for 20 hours or
12000
0.23% occurrence in a year
11,301
11000
How can we encourage someone to invest on a 300MW
10000
generator which will only be used 0.23% annually?
Peaking
9000
Load (MW)

8000 Mid-merit
7000
Up to 7,506MW utilized 70% of the time
6000
Baseload
5000

4,286 4000
0%
2%
4%
6%
8%
9%
11%
13%
15%
17%
19%
21%
23%
25%
27%
28%
30%
32%
34%
36%
38%
40%
42%
44%
45%
47%
49%
51%
53%
55%
57%
59%
61%
63%
64%
66%
68%
70%
72%
74%
76%
78%
80%
81%
83%
85%
87%
89%
91%
93%
95%
97%
99%
% of Hours in a year
Number of hours:
5% of 1 year = 438 hours
10% of 1 year = 876 hours
Total number of hours in 1 year= 8760 hours
Loss of Load Expectation (LOLE)
LOLE
• number of days in a given period that there will be brownouts or lack of supply
• Target LOLE should be determined based on cost-benefit analysis
• Target LOLE should determine policies/regulations – how much reserves? Appropriate price caps?
• HOW MUCH ARE WE WILLING TO PAY SO WE DO NOT EXPERIENCE ECONOMIC LOSS?
Cost-Benefit Analysis
12000 1. Add generation facilities – however will lead to additional
power costs
11000
2. Brownout- what will be the economic impact- Value of Lost
10000 Load (VOLL)
9000 208.8 209.21
207.35 206.17 207.3
Load (MW)

VOLL (P/KWh)
202.85 202.62
8000 198.48
197.3
195.09
193.44
7000 190.18

6000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year

5000

4000
0%
2%
4%
6%
8%
9%
11%
13%
15%
17%
19%
21%
23%
25%
27%
28%
30%
32%
34%
36%
38%
40%
42%
44%
45%
47%
49%
51%
53%
55%
57%
59%
61%
63%
64%
66%
68%
70%
72%
74%
76%
78%
80%
81%
83%
85%
87%
89%
91%
93%
95%
97%
99%
% of Hours in a year
The Generation Sector regulated entities
competitive
competitive Supply Sector Distribution Transmission

natural monopolies

Revenue sources of generators

oWESM spot sales
oContracts with DUs
oAS contracts with NGCP

• More competitive rates

More investments • Energy security
• More efficient and reliable plants
Way forward
• We support the following way forward identified by DOE:
o CSP so that DUs may already bid out their requirements for new
investments to come in
o AS policies so that NGCP will contract on a firm basis all AS
requirements
o Reserves Market to co-optimize the utilization of energy and reserves

• In addition, we propose the following:

o Lessen barriers to entry for new power plants (COC and other
requirements); continuous and expanded implementation of EVOSS
o Increase the WESM price cap and secondary price cap to consider
peaking plants dispatched at very low capacity factors or the VOLL
o Consider additional markets – i.e. derivatives market
o Sufficient transmission and connection facilities
Thank you!