What is ILP?

The  DOE published on its website the announcement that the Interruptible Load Program, or ILP, will be rolled out in Luzon to address the apparent power generation capacity shortfall in light of the projected increase of demand during the summer months.

The program is a demand-side management system* that allows large power consumers (e.g., industrial plants, malls) which have their own generators to get compensation if they use them. Through ILP, the participating end-users (or the participants) agree with their distribution utility (DU) or electric cooperative (EC) to disconnect from the distribution network (i.e., not get their electricity needs from their DU or EC) and use their generators at agreed times. During such period, the freed up power capacity can then be made available to non-participants, who will pay an additional cost as compensation for the participants. The additional cost is approved by the ERC, based on the formula set in ERC's Resolution No. 8, series of 2010.

The ILP is a manifestation of the economic truism: as demand of goods exceeds its supply, its price will increase. In ILP, this is manifested by the situation that non-participants will have to pay for the electricity consumption of the participants just to enjoy availability of electricity.

You may ask: How come the non-participants have to pay for the fuel used by the participants, considering that the non-participants were not present in the arrangement (i.e., during the participants' application with their distribution utility or electric cooperative.)? Where is the justice in making the smaller users pay for the use of generator of the larger consumers. Is this like against the idea of inclusive growth?

The rationale is that the participants may incur higher costs in the use of their generator sets, and the non-participants get the benefit of avoiding brownouts.

While I cannot argue with the point of "avoiding brownouts," the rationale of compensation for the costs of using the generator sets is questionable for me. Don't businesses consider generator sets as assets, which have to be used to generate revenue? Which means their consumers actually pay for them for every object they buy from that establishment as part of their good's price. I am sure they do. Also, as assets, they have insurance, which the consumers also pay for (again, included in the price of goods).

Just my thoughts.


*Demand-sidemanagement refers to strategies done to reduce demand or affect pattern of demand for electricity. My own rendition only.