WMPC Fears Potential Shutdown, Blackouts Looming for Zamboanga

Western Mindanao Power Corporation (WMPC), a diesel power plant in Zamboanga City, has informed relevant government agencies that it is expected to exhaust its fuel supply in the coming weeks. Consequently, the plant may need to cease operations, causing rotating brownouts in Zamboanga City and nearby areas.
Previously, WMPC was engaged in a non-firm Ancillary Services Procurement Agreement (ASPA) with the National Grid Corporation of the Philippines (NGCP). This agreement enabled WMPC to provide critical power support to maintain grid stability in Mindanao and ensure a consistent power supply in Zamboanga City and nearby areas. However, this non-firm ASPA expired on April 25, 2024.

While NGCP awarded a new firm ASPA to WMPC in April 2023, its implementation is currently on hold pending approval from the Energy Regulatory Commission (ERC).

Under a non-firm ASPA, power plants are not guaranteed to provide ancillary services to the power grid at all times. From January to March 2024, WMPC faced approximately Php 50 million in losses as power plants holding new firm ASPA contracts received provisional authority from NGCP. In this arrangement, plants with non-firm ASPAs, such as WMPC, were deprioritized.

“Unless the ERC approves our ASPA, we will lack the necessary funds to recover our losses and procure fuel for the continued operations of WMPC,” stated Jose Luis Angco, Vice President and Business Manager for Plant Operations at WMPC. “Operating a diesel plant is costly. Without an approved and acceptable ASPA, we will incur unrecoverable losses that affect our ability to replenish our fuel stock. This will force us to reduce and eventually halt our operations.”

Zamboanga is situated at the end of a long transmission line, 270 kilometers away from the nearest base load power station. Without the reactive power support that only WMPC can provide, the voltage in the city will drop to unsustainable levels, leading to power fluctuations and, worse, outages—especially during peak hours.

In a recent report, the ERC acknowledged the higher fuel costs associated with diesel plants. Nevertheless, these plants are crucial as they serve as safeguards against potential blackouts, particularly during periods of increased power demand, such as those experienced during El Niño events. However, diesel plant operations are not viable without an acceptable ASPA contract, as they struggle to recover their operational costs. They are often contracted only during peak demand periods and are compensated only a fraction of the necessary charges, making these payments insufficient to cover fuel and other operational expenses throughout the entire year.

Despite the expiration of its ASPA, NGCP has designated WMPC as a must-run unit to provide essential ancillary services, especially during this time when the country faces yellow and red alerts.

“Currently, WMPC operates as a Must-Run Unit participating in the Wholesale Electricity Spot Market (WESM). However, this setup is not sustainable. We anticipate incurring significant losses after the summer season when the plant might be dispatched for voltage correction at a reduced rate of between 3 to 6 Php/kWh.,” said Angco. “We aim to continue providing the necessary ancillary services to support NGCP in ensuring a sustainable power supply in Zamboanga all throughout the year. Nonetheless, the approval of our ASPA is crucial for us to continue operations, as it allows us to recover costs and maintain our activities,” Angco added.

In its social media post, the Zamboanga City Electric Cooperative expressed concerns over the expired ASPA between the NGCP and the WMPC. The electric distribution utility emphasized the critical need for ancillary services in Zamboanga City to maintain a stable power supply.

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