Bring Down Power Rates by UP

As a Filipino living outside the Philippines, I have missed some research development like the study presentation by University of the Philippines (UP) professors on Reducing Power Rates in Generation. I have so much respect for the researchers since some of them have been my professors in my unfinished PhD degree in power systems.

Their study focuses on economic generation dispatch focus on MERALCO's power procurement. The study presents different cases or scenarios where MERALCO can procure from different power suppliers; NPC, IPPs, and WESM. In each case, the reduced power cost is reported and highlighted. This study is even utilized by one of our senators.

I agree on the principle of lowering power cost in anyway and anytime. Every effort on lowering power rates is my kind of thing.

But I am not sure if a DU which might have some purchase contracts with some IPPs will agree not to abide by those contracts. And note that these legal contracts go thru regulatory hearings.

I am not sure that the study focusing on rate economics provided a very firm ground on transmission and distribution capacity constraints of power procurement. DUs economic operation is coupled with technical constraints of the power system.

I am not sure the study related to uncertainty of demand and generation availability as they analyzed past data of the power rates. The variation of demand and generation reliability has much impact on power procurement.

I am not also sure that DUs participation in WESM is not beneficial for consumers. Most of the time, there are several hours of the day that the WESM spot price is zero! See example figure below. Thus, it can be beneficial to participate in the WESM.

Moreover, the senator said that the study is reliable since the researchers have developed a computer-simulation model. I am not sure if the senator is well versed on this. Power system engineers doing technical or economic studies have been using computer-simulation models for the past n years. The reliability or usability of a research study is not based on whether it was done using a computer-simulation model or by hand-manual computations but on the basis of its practicality.

There are a vast strategies to lower power procurement cost by DUs, in the end, legal contracts, power system constraints, uncertainty in demand and generation, and regulatory policies must be considered.