Cement factory selling excess power to Cebu power utility

September 9, 2009 CEBU CITY — CEMEX Philippines, through its unit Apo Cement Corp. based in Naga, Cebu, has agreed to sell its excess power to the Visayan Electric Co., Inc. (VECO) as part of efforts to boost power supply in Cebu.

CEMEX president Sergio Menendez and VECO president Dennis A. Garcia yesterday signed a one-year interim power supply agreement that allows CEMEX to provide VECO with 10 megawatts (MW) from a 66-MW diesel-fired power plant during peak hours. The deal would be submitted to the Energy Regulatory Commission for approval.

“It (agreement) won’t cure [the shortage in the grid], but it would help. Every bit helps,” said Arlo A.G. Sarmiento, VECO vice-president for utility economics.

Apo Cement has excess power supply because of an energy efficiency program it has been implementing since last year, said Darwin DJ Mariano, CEMEX public affairs director for Asia.

The power supply agreement, which took three years to finalize, is timely since September is a critical month for the Cebu-Negros-Panay (CNP) grid due to the scheduled preventive maintenance shutdown of some generating units, and the derated capacities of other units. The CNP grid requires an average of 1,000 MW daily and reserves of at least 100 MW.

Any emergency plant shutdown due to technical problems causes power outages during peak hours in the three islands, as experienced for three days from Aug. 27 to Sept. 5.

The grid’s supply fell short by 80 MW to 90 MW a day when the coal plant of Toledo Power Co. in Cebu conked out and other units dropped out of the system during the period.

The supply agreement with CEMEX is expected to cover part of VECO’s share in the grid’s shortfall. VECO, which requires at least 330 MW daily, is usually asked to deload 10 MW to 20 MW from the CNP grid whenever supply runs short.

The agreement will also complement VECO’s interruptible load program, which calls on large customers, such as San Miguel Corp. and the shopping malls, to deload and generate their own power during a shortage. The customers are paid for the incremental cost of running their generating units.

“Between 12 noon and 1 p.m. is really our problem whenever there’s a shortage,” said Sebastian R. Lacson, VECO vice-president for administration and customer services.

VECO has signed up customers that can generate almost 40 MW when needed. However, only a few have been actively participating in the program as some customers are constrained by technical problems and lack of fuel, among other reasons, Mr. Lacson added.

VECO will continue to implement its interruptible load program until the Visayas Supply Augmentation Auction (VSAA) program, a market that would allow trading of uncontracted and interruptible capacities of grid-connected users, is in place. The VSAA has been approved by the Energy Regulatory Commission, but guidelines have yet to be issued.

The tight power supply situation in Cebu, Negros and Panay is expected to ease in the first quarter of next year, when the first of three 82-MW coal plants being built by the Cebu Energy Development Corp. is completed. — (Marites S. Villamor)

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