PSALM Justifies Uncertainty in Malaya Plant

PSALM justifies uncertainty in Malaya plants operations

byMyrna VelascoOctober 15, 2014As the government has been exhausting all excuses defensible or not so it can opt for emergency powers on the countrys power supply next year, the Power Sector Assets and Liabilities Management Corporation (PSALM) is adding voice to the controversy by laying down probable precarious operation of the 650-megawatt Malaya thermal plant next year.

The technical difficulties encountered by Malaya thermal power plant make its availability and dependability during the Malampaya shutdown from March to June 2015 uncertain, the state-run firm President Emmanuel R. Ledesma Jr. has noted.

PSALM has emphasized that since the last shutdown of the Malampaya gas production facility in November-December last year, the plants generating unit 1 already logged more than 208.07 hours of operations and 2,301.38 hours for generating unit 2.

It can be culled though that this is the same controversial plant that was on open breaker status at that time, meaning it has not been synchronized to the grid when it was supposedly expected to help ease supply tightness on those periods.

Since March this year, a Circular issued by the Department of Energy (DOE) has specifically lined up the Malaya plant to be just called for dispatch as must-run unit (MRU) as may be determined or declared by system operator National Grid Corporation of the Philippines.

PSALM justified that the Malaya plant is an aging facility, clocking in a life span of 40 years already. It comprises of two units with a dependable capacity of 290-MW and 340MW each.

Malaya unit 1 has been non-operational since March 21, 2014, due to material loss of HP (high pressure) turbine rotating parts that led to the high turbine vibration, PSALM said.

The generating units overhaul is scheduled to commence latter part this year and is expected for completion in the next 6 to 8 months.

PSALM averred further it is very likely that, upon actual opening of the unit by the contractor, a more extensive damage would be discovered.

The company qualified that even if the repair of Malayas unit 1 will turn out successful, its purported 100-percent reliable operation cannot be guaranteed, given its age, continuous and longer dispatch at full capacity, and fuel delivery constraints.Rappler

Burn gov't plant if not helping consumers

Osmea says the government must decide whether or not to keep the state-owned Malaya as a security plant or close it down

Ayee Macaraig

Published 7:36 PM, Jan 23, 2014

Updated 11:57 PM, Jan 23, 2014

DYNAMITE MALAYA.' Senators criticize government agencies for failing to use the state-owned Malaya power plant to bring down the prices of electricity and help consumers. Photo by Albert Calvelo/Senate PRIB

MANILA, Philippines Why dont you burn or dynamite the plant and sell it for scrap? Youre fooling a lot of people.

Senate Energy Committee Chairman Sergio Serge Osmea III took energy officials to task for failing to promptly use the state-owned Malaya thermal power plant in Rizal to help bring down the price of electricity.

At the resumption of the Senate hearing into the power rate hike of Manila Electric Company (Meralco) on Thursday, January 23, Osmea said the governments decision to keep the old plant without using it during times of emergency was a conflict of policy.

He said one such emergency was the power shortage last November to December that led to the rate hike. The scheduled shutdown of the Malampaya gas field and unscheduled shutdowns of other power plants forced power distributor Meralco to buy expensive power from the Wholesale Electricity Spot Market (WESM). (READ:INFOGRAPHIC: How WESM affects your electricity bill)

By his calculations, Osmea said that using the Malaya plant could have significantly brought down prices in WESM by at least P20. As a result, the burden passed on to consumers would have been lower.

Officials of the state-run Power Sector Assets and Liabilities Management Corporation (PSALM) explained that they did not dispatch power from Malaya to avoid incurring additional losses. These losses would have been passed on to consumers through the universal charge. Malaya is under PSALM.

Osmea told them, Thats totally irrelevant. You kept the plant in case of emergency. An emergency occurred but you did not want to use the plant because you dont want to add charges. It doesnt make sense to me.

Senator Francis Escudero echoed Osmea. So anong purpose, silbi ho sa atin ng Malaya? Wala sa ngayon kasi ayaw ninyong malugi. (So what is Malayas purpose for us? None because you dont want to incur losses.)

This is not the first time energy officials were under fire for failing to tap Malaya to reduce the rate hike. The issue was also raised during theSupreme Court oral argumentsand theHouse of Representatives probeinto the hike earlier this week.

In the Senate hearing, PSALM department manager Abelardo Sapalaran admitted that they bid in WESM even if Malaya is unable to supply power only to comply with the must-offer rule in the spot market.

Sapalaran clarified that Malaya was not on maintenance shutdown but was on economic shutdown because of the companys financial woes.

This prompted Escudero to ask about the purpose of Malaya, Soirrelevant, balewala? (So its irrelevant, useless?)

Energy Secretary Jericho Petilla admitted as much. I saw that Malaya is really a headache. Theyre perennially offering [in WESM] but they are not considered because [the players] know they wont be dispatched.

Petilla said he is studying issuing a circular considering Malaya as a must-run unit.

Osmea said he was not happy with the answers of the agencies on Malaya.

The administration has to make up its mind. Is Malaya going to be used as a security plant or not? If not, close it down. You cannot say it will bid in WESM and then they wont run it. It will affect the other peoples bids, Osmea said in an interview after the hearing.

The Senate is investigating the P4.15 per kilowatt-hour (kWh) rate hike of Meralco, the biggest power rate hike in recent history. Meralco was set to implement the increase in 3 tranches starting December but the Supreme Court issued atemporary restraining order(TRO).(READ:13 things Meralco consumers should know about the hike)

Meralco vs PSALM, finger-pointingOsmea also castigated the PSALM, Department of Energy (DOE), Energy Regulatory Commission (ERC), and National Grid Corporation of the Philippines (NGCP) for disclaiming responsibility on Malaya.

PSALM President Emmanuel Ledesma said Malaya only ran from December 2 to 10 because NGCP never informed PSALM that there was a shortage.

In turn, NGCP officials said they issued only one alert because data from WESM showed there was no shortage last November.

Osmea said, You made a mistake because the market reflected there was a shortage. That was the job of NGCP to issue warnings in advance that we will have a tight situation on such a day, yet you issued only one alert on November 15.

Meralco and PSALM also blamed each other for contributing to the rate hike.

Meralco general counsel Ray Espinosa said, Why is Malaya not synchronized with the grid? It distorts the behavior of market participants. We need to address that.

PSALMs Ledesma shot back, pointing to Meralcos instruction to power generator Therma Mobile to bid 100 megawatts at the WESM ceiling price of P62 per kWh. Meralco drew criticism in the House hearing over this move.

Why did Meralco bid P62 when there was supply? In our hearing in Congress, I remember that was discussed. How come now, I am hearing different things?

What happens when SC decides?Senators though were more concerned about how the government agencies and power companies will respond to the Supreme Courts decision on the power rate hike.

Escudero and Senators Antonio Trillanes IV, Cynthia Villar and Pia Cayetano asked about reports of possible blackouts in summer as a result of the TRO.

Petilla said the matter was a commercial problem that Meralco and power generators can negotiate on. I dont want to say bite the bullet but probably they can agree about it. Its only two months.

In case Meralco will have to impose the rate hike on consumers, Escudero suggested that the power distributor stagger the charges for a longer period of time to lighten the burden on consumers. Meralco was open to the suggestion.

Osmea said the Senate cannot wrap up its investigation because the ERC has yet to submit its report on allegations of collusion in the rate hike.

The ERC missed its December 30 and January 15 commitments to submit the results.

ERC Chairperson Zenaida Ducut could not respond to Osmeas question on when it can finish the report. The House also criticized Ducut for the delay.

Osmea asked, Are you hiding something?

Ducut responded, Were just asking for more time.

Osmea said, How much more time? Unless youre waiting for info from the US or Antarctica, Im sure you can give me a definite date. For goodness sake.

Ducut said, We will commit to a period of 3 months.

Osmea exclaimed, Three months? The next problem is coming in the April [summer months]. You keep on moving it back. ASAP is not good enough. Give me a date. Rappler.com

Related stories:

Petilla endorses Malampaya subsidy billPetilla: Tight suply till 2016 but no power failureWHO IS TO BLAME FOR MERALCOS RATE INCREASE?

ByDucky Paredeson February 11, 2014

THERE will be rotating brown-outs in a few months -- the kind that we had during the Cory years.

Meralco and the Philippine Independent Power Producers Association (PIPPA) have been hinting at this in the event that the Supreme Court completely stops Meralco from collecting the pass-through generation charges of independent power producers (IPPs), estimated at P18 billion.

And, even Secretary Jericho Petilla of the Department of Energy (DOE) admits that there could really be power disruptions this summer because we have precariously thin reserves -- total demand for Luzon is expected to hit 10,300 MW as against an available combined supply of 10,500 MW. Thus, any unscheduled shutdown or tripping of even just one IPP in the Luzon Grid would likely force DOE to order power rationing for Metro Manila customers.

When the specter of rotating blackouts first surfaced some weeks back, Petilla was quick to dismiss it citing the assurance of stable supply in the years ahead, claiming that the various committed power projects meant to augment supply were on track.

But this turns out to be no more than wishful thinking, since only two committed projects are actually ongoing, and these are the 135-MW and 300-MW coal-fired plants of the Southern Luzon Thermal Energy Corp. (a joint venture of Trans-Asia and Ayala Corp.) and the Southwest Luzon Power Generation Corp. (of the Consunji Group).

The other projects mentioned by Petilla may not take off at all.

Petilla was candid enough to admit this blackout scenario in revealing that the tight supply situation would puts the Luzon Grid on yellow alert this summer, which means there will be rotating power interruptions once a major power plant bogs down.

Kapag may plantang biglang bumagsak ay talagang hindi natin inaasahan yan. Parang kotse yan, tumatakbo, hindi natin alam kung kailan titirik, said Petilla.

And to boost supply, Petilla said the DOE has decided to run the state-owned Malaya Thermal Plant in April the very same idled government facility that senators blamed for last months upsurge in electricity prices at the

Wholesale Electricity Spot Market (WESM) during the November-December weeks when the Malampaya gas facility and several IPPs were on simultaneous shutdowns.

PSALMs Ledesma subsequently admitted during the same hearing, that the Malaya plant was not activated because it would have cost this cash-strapped government firm as much as P1.35 billion in operational losses were it to run this facility for a month to augment the supply available at WESM.

The Senate energy committee chairman, Sergio Osmea III, suggested that on the basis of such official reasoning, PSALM might as well burn or bomb the Malaya plant and sell it for scrap iron.

***

All these things point to the likelihood of summer blackouts and the unconscionable idling of the governments Malaya facility bring us to this point: What convinced Communications Secretary Herminio Coloma to go on combat mode and attack the power industry players by announcing that electricity consumers should not be made to pay for the unjustified rate hike.

Coloma claimed it was the belief of President Aquino that the Electric Power Industry Reform Act (EPIRA) provision on possible disgorgement of profits must be enforced on industry players once the DOE and Department of Justice (DOJ) find proof of collusion among them, and that the rate increase was unjustified because it was triggered by a foreseeable event for which these same players could have prepared.

Clearly, Coloma was blaming the private sector for a mess that was mostly the governments own makinga botched job that is likely to get worse in the months and years ahead before it gets any better.

It was the DOEs role to make sure that power plant maintenance shutdowns coinciding with the Malampaya gas shutdown were rescheduled to avoid a wide supply gap that would drive up electricity prices.

Indeed, during the hearings at the Senate and at the House of Representatives as well, Secretary Petilla declared that he had called for several meetings to address the situation. In both congressional probes, Petilla even asserted that he had instructed officials of the Malaya plant to make necessary preparations to run it for 15 days, but, curiously he stopped short of explaining why Malaya had not been used during the shutdown period.

What Colomas finger-pointing suggests is that he is merely covering up the failure of the DOE by blaming industry players for Decembers steep rate hike.

It became very clear during the congressional hearings that had the Malaya thermal plant, which has an available capacity of 610 MW, been operated, the spike in the WESM prices would have been completely avoided.

In fact, a Meralco study presented during the Senate hearing bared that had Malaya been dispatched during the Nov. 11-Dec. 10 shutdown period, WESM prices would have fallen by as much as 70% from P21/kWh to just P5.

It has also become very clear, based on admissions by PSALMs Ledesma that Malaya was in flagrant violation of the WESM must-offer ruleand these violations were tolerated by the Philippine Electricity Market Corp. (PEMC), which operates WESM.

Remember that the Malaya thermal plant is a government- owned and -controlled power plant under PSALM, of which Petilla is vice chairman. Petilla also chairs PEMC.

So if Petilla was doing his job during the shutdown period, he could have avertedas it was his duty to do sothe unusual spike in WESM prices.

Yet Petilla did nothing. He has not even taken the PSALM management to task for violating WESM rules in idling the facility and for not complying with his instructions to operate and dispatch Malaya.

As the market operator of WESM, the Petilla-chaired PEMC actually had the first opportunity to notice and address the unusually high prices obtaining at WESM. Yet it did not act.

In fact, PEMCI even cleared an offer price of P62 just to satisfy a measly 0.5 MW demand. Why?

All told, Secretary Petilla could have made a big difference in ensuring lower WESM prices. But he failed big-time.

***

But, where is Coloma coming from? Does he think that part of his job as Palace communications secretary is to cover for the failings of his Cabinet peers?

The Supreme Court reacted to Colomas blaming the judiciary for the unbridled rice smuggling when he called for closer coordination or teamwork among all agencies involved; he also asked the courts to act faster on pending smuggling cases to complement the Administrations drive against smugglers.

SC spokesman Theodore Te wrote: I am sure Secretary Coloma knows the judiciary cannot act on cases that are not brought before it and convictions cannot be secured unless the burden of proof imposed by the Constitution is discharged by the (DOJ), which falls under the executive and not the judicial department.

Te said the zero conviction rates in the 157 rice smuggling cases over the past three years has to do not only with how fast the courts resolve cases but also with the quality of the evidence that prosecutors presented in support of their cases.

Te also said that that the secretary should know that, The courts are not expected to have closer coordination or teamwork with the prosecutorial arm as, on the contrary, they are expected to be independent and, on many occasions, play the spoilers role.

***

Readers who missed a column can accesswww.duckyparedes.com/blogs. This is updated daily. Your reactions are welcome [email protected] you can send me a message through Twitter@diretsahan.

Category:

Column Of The Day- See more at: http://www.malaya.com.ph/business-news/opinion/who-blame-meralco%E2%80%99s-rate-increase#sthash.eTgvl1As.dpufFriday, January 24. 2014

DOE chief asked to terminate 600mw Malaya power plant

Written by Jelly F. Musico

Posted online by Jigs Nepomuceno in National News at 00:00

MANILA The Power Sector Assets and Liabilities Management Corp (PSALM) has asked Department Energy (DOE) Secretary Carlos Jericho Petilla to terminate the operation of the government-owned 600-megawatt Malaya thermal power plant.

Actually, when I came in I saw this Malaya is creating headache because they are offering but would not really dispatch and they (PSALM) requested as early as middle of last year to retire them, Petilla told the Senate inquiry on power rate hike and bills reviewing EPIRA (Electric Power Industry Reform Act) of 2001.

They really want to get rid of this plant because this plant is cheaper to be burned than to actually operate in a sense, the DOF chief added.

During the hearing, the senators learned that Malaya complied with a must offer rule when it bidded at P45 but actually did not dispatch power specially when Malampaya went on 30-day maintenance shutdown late last year.

You participated in the bidding but you did not dispatch because youre not synchronized with the national grid. So you're fooling a lot of people, youre fooling me and youre fooling secretary, Sen. Sergio Osmena III, chair of the Senate committee on energy, told the PSALM officials.

PSALM department manager Abelardo Sapalaran explained that Malaya plant has been complying with must offer rule of the Wholesale Electricity Spot Market (WESM) but without dispatching power for the last two years.

Actually, were losing since 2006 and we were penalized already. The purpose of submitting bid offer is to comply with WESM rules must-offer, Sapalaran said.

Rey Espinosa, legal counsel of MERALCO, admitted that they offered at P62 but due to Malayas failure to dispatch, the price hit at P62 per kilowatt hour.

If only Malaya dispatched when it offered P45, the price could not have hit P62 because we bid at P62 so that it will not be dispatched, Espinosa explained.

Sapalaran told the Senate panel that it takes 14 to 16 hours to open the Malaya plant and synchronize it with NGCP.

PSALM president Emmanuel Ledesma said they did not run Malaya when Malampaya and other power plants went to maintenance shutdown because there was sufficient supply.

So why did we not run Malaya, personally in my understanding, is the supply sufficient, I concluded that because NGCP (National Grid Corporation of the Philippines) never mentioned anything to us that there was insufficient supply, Ledesma said.

Osmena, however, believed that non-operation of Malaya has led to the increase of prices of power.

If only Malaya dispatched at least 300mw, the prices in the WESM could have been gone down from P62 to P12, Osmena said in media interview after the five-hour hearing.

Osmena said the problem is PSALM tries to save money because they admitted that running Malaya will incur for PSALM a loss of P2.2 billion a year.

I think they have to make their mind if Malaya is going to be used as security plan or not because if not, then close it down, Osmena said.

Senator Cynthia Villar said she was surprised to learn that Malaya plant cannot be used in times of emergency.

I was so surprise that there was a chance for them to help and they did not sell their power, Villar said.

Senator Francis Chiz Escudero questioned the PSALMs action to comply with WESMs must offer rule without dispatching power even in time of emergency.

So whats the purpose? Why did you offer bid and would not dispatch power? Thats irrelevant, Escudero said.

Petilla said time has not yet come for the 600mw Malaya to be shut down despite claim by PSALM that it is no longer earning money.

That time is not now, so do not mothball that plant at this time. Im quite sure that there is a balance that we can do right now, Petilla said. (PNA)

CTB/JFM

- See more at: http://www.zambotimes.com/archives/news/84316-DOE-chief-asked-to-terminate-600mw-Malaya-power-plant.html#sthash.NuRuxwjj.dpufWHO IS TO BLAME FOR MERALCOS RATE INCREASE?

ByDucky Paredeson February 11, 2014

THERE will be rotating brown-outs in a few months -- the kind that we had during the Cory years.

Meralco and the Philippine Independent Power Producers Association (PIPPA) have been hinting at this in the event that the Supreme Court completely stops Meralco from collecting the pass-through generation charges of independent power producers (IPPs), estimated at P18 billion.

And, even Secretary Jericho Petilla of the Department of Energy (DOE) admits that there could really be power disruptions this summer because we have precariously thin reserves -- total demand for Luzon is expected to hit 10,300 MW as against an available combined supply of 10,500 MW. Thus, any unscheduled shutdown or tripping of even just one IPP in the Luzon Grid would likely force DOE to order power rationing for Metro Manila customers.

When the specter of rotating blackouts first surfaced some weeks back, Petilla was quick to dismiss it citing the assurance of stable supply in the years ahead, claiming that the various committed power projects meant to augment supply were on track.

But this turns out to be no more than wishful thinking, since only two committed projects are actually ongoing, and these are the 135-MW and 300-MW coal-fired plants of the Southern Luzon Thermal Energy Corp. (a joint venture of Trans-Asia and Ayala Corp.) and the Southwest Luzon Power Generation Corp. (of the Consunji Group).

The other projects mentioned by Petilla may not take off at all.

Petilla was candid enough to admit this blackout scenario in revealing that the tight supply situation would puts the Luzon Grid on yellow alert this summer, which means there will be rotating power interruptions once a major power plant bogs down.

Kapag may plantang biglang bumagsak ay talagang hindi natin inaasahan yan. Parang kotse yan, tumatakbo, hindi natin alam kung kailan titirik, said Petilla.

And to boost supply, Petilla said the DOE has decided to run the state-owned Malaya Thermal Plant in April the very same idled government facility that senators blamed for last months upsurge in electricity prices at the

Wholesale Electricity Spot Market (WESM) during the November-December weeks when the Malampaya gas facility and several IPPs were on simultaneous shutdowns.

PSALMs Ledesma subsequently admitted during the same hearing, that the Malaya plant was not activated because it would have cost this cash-strapped government firm as much as P1.35 billion in operational losses were it to run this facility for a month to augment the supply available at WESM.

The Senate energy committee chairman, Sergio Osmea III, suggested that on the basis of such official reasoning, PSALM might as well burn or bomb the Malaya plant and sell it for scrap iron.

***

All these things point to the likelihood of summer blackouts and the unconscionable idling of the governments Malaya facility bring us to this point: What convinced Communications Secretary Herminio Coloma to go on combat mode and attack the power industry players by announcing that electricity consumers should not be made to pay for the unjustified rate hike.

Coloma claimed it was the belief of President Aquino that the Electric Power Industry Reform Act (EPIRA) provision on possible disgorgement of profits must be enforced on industry players once the DOE and Department of Justice (DOJ) find proof of collusion among them, and that the rate increase was unjustified because it was triggered by a foreseeable event for which these same players could have prepared.

Clearly, Coloma was blaming the private sector for a mess that was mostly the governments own makinga botched job that is likely to get worse in the months and years ahead before it gets any better.

It was the DOEs role to make sure that power plant maintenance shutdowns coinciding with the Malampaya gas shutdown were rescheduled to avoid a wide supply gap that would drive up electricity prices.

Indeed, during the hearings at the Senate and at the House of Representatives as well, Secretary Petilla declared that he had called for several meetings to address the situation. In both congressional probes, Petilla even asserted that he had instructed officials of the Malaya plant to make necessary preparations to run it for 15 days, but, curiously he stopped short of explaining why Malaya had not been used during the shutdown period.

What Colomas finger-pointing suggests is that he is merely covering up the failure of the DOE by blaming industry players for Decembers steep rate hike.

It became very clear during the congressional hearings that had the Malaya thermal plant, which has an available capacity of 610 MW, been operated, the spike in the WESM prices would have been completely avoided.

In fact, a Meralco study presented during the Senate hearing bared that had Malaya been dispatched during the Nov. 11-Dec. 10 shutdown period, WESM prices would have fallen by as much as 70% from P21/kWh to just P5.

It has also become very clear, based on admissions by PSALMs Ledesma that Malaya was in flagrant violation of the WESM must-offer ruleand these violations were tolerated by the Philippine Electricity Market Corp. (PEMC), which operates WESM.

Remember that the Malaya thermal plant is a government- owned and -controlled power plant under PSALM, of which Petilla is vice chairman. Petilla also chairs PEMC.

So if Petilla was doing his job during the shutdown period, he could have avertedas it was his duty to do sothe unusual spike in WESM prices.

Yet Petilla did nothing. He has not even taken the PSALM management to task for violating WESM rules in idling the facility and for not complying with his instructions to operate and dispatch Malaya.

As the market operator of WESM, the Petilla-chaired PEMC actually had the first opportunity to notice and address the unusually high prices obtaining at WESM. Yet it did not act.

In fact, PEMCI even cleared an offer price of P62 just to satisfy a measly 0.5 MW demand. Why?

All told, Secretary Petilla could have made a big difference in ensuring lower WESM prices. But he failed big-time.

***

But, where is Coloma coming from? Does he think that part of his job as Palace communications secretary is to cover for the failings of his Cabinet peers?

The Supreme Court reacted to Colomas blaming the judiciary for the unbridled rice smuggling when he called for closer coordination or teamwork among all agencies involved; he also asked the courts to act faster on pending smuggling cases to complement the Administrations drive against smugglers.

SC spokesman Theodore Te wrote: I am sure Secretary Coloma knows the judiciary cannot act on cases that are not brought before it and convictions cannot be secured unless the burden of proof imposed by the Constitution is discharged by the (DOJ), which falls under the executive and not the judicial department.

Te said the zero conviction rates in the 157 rice smuggling cases over the past three years has to do not only with how fast the courts resolve cases but also with the quality of the evidence that prosecutors presented in support of their cases.

Te also said that that the secretary should know that, The courts are not expected to have closer coordination or teamwork with the prosecutorial arm as, on the contrary, they are expected to be independent and, on many occasions, play the spoilers role.

***

Readers who missed a column can accesswww.duckyparedes.com/blogs. This is updated daily. Your reactions are welcome [email protected] you can send me a message through Twitter@diretsahan.

Category:

Column Of The Day- See more at: http://www.malaya.com.ph/business-news/opinion/who-blame-meralco%E2%80%99s-rate-increase#sthash.eTgvl1As.dpufPSALM: Malaya plant can't always run when needed

PSALM says the plant has slow start-up time and low fuel replenishment rate

Rappler.com

Published 6:58 PM, Feb 12, 2014

Updated 7:00 PM, Feb 12, 2014

NO DISPATCH? PSALM reportedly avoided as much as P1 billion in losses by keeping the Malaya plant offline during the Malampaya shutdown. File Photo from AFP.

MANILA, Philippines The Power Sector Assets and Liabilities Management Corporation (PSALM) said Wednesday, February 12 that it should not be blamed for not dispatching the Malaya thermal power plants energy loadwhen people needed it last year.

Emmanuel Ledesma, president of PSALM, said the power plants slow start-up time and its low fuel replenishment rate were to blame for their non-compliance to the must-offer rule of the Wholesale Electricity Spot Market (WESM).

Ledesma added, "the technical limitations of Malaya make it a sheer impossibility for Malaya to be always traded through the WESM bidding process."

He explained further that, if the Malaya plant traded its power at the WESM at its full, 650-megawatt (MW) capacity for 28 days, it would take 3 months of non-operation to run again.

The power plant recently earned an exemption from WESM's must-offer rule and instead became a must-run unit.

A must-run unit must provide needed power supply on real-time basis or on a particular schedule deemed necessary by WESM system operator National Grid Corporation of the Philippines (NGCP) to ensure reliability of power supply in the grid, especially when there's a shortfall.

The must-offer rule requires all generation companies registered in WESM to declare and offer their maximum generating capacities to prevent capacity withholding.

Energy Secretary Carlos Jericho Petilla said PSALMs decision not to dispatch Malayas energy load despite bidding in the WESM constituted a violation of WESM rules.

Petilla said Malaya was on an open breaker" status, meaning the plant actually made an offer but didnt dispatch energy when asked.

Ledesma countered, saying PSALMs open breaker status has since started in August 2012, clarifiying that the illegality of this has yet to be established in accordance with due process in the proper forum.

PSALM explained to the Philippine Electricity Market Corporation (PEMC) Market Surveillance Committee in June 2013 the technical and financial reasons behind its decision to not trade Malaya in the WESM, in response to the PEMC MSCs May 2013 letter. PEMC is the spot market operator.

In the letter, PEMC asked PSALM to clarify Malayas status as an open breaker plant when not run by the NGCP as a must-run unit. Ledesma said the PEMC has, to date, not yet responded to PSALMs letter.

Prior to the letter, PSALM emphasized that the Energy Regulatory Commission (ERC) rather than the PEMC has the original and exclusive jurisdiction over all cases regarding disputes between or among members of the energy sector.

The ERC also holds jurisdiction over contesting fees, fines, penalties, and rates.

Ledesma added that PSALM has brought this jurisdictional issue to the Supreme Court in relation to a different case."

The ERC has requested an explanation from PSALM regarding the open breaker status issue in January. Rappler.comPSALM approves rehab of Malaya plant

The rehabilitation of the Malaya Unit 1 will help plug the anticipated power supply deficiency next year

Rappler.com

Published 8:43 AM, Aug 20, 2014

Updated 8:43 AM, Aug 20, 2014

IN AID OF POWER SUPPLY. The rehabilitation of the Malaya Unit 1 will help plug the supply deficiency that is anticipated next year. File photo by Agence France-Presse

MANILA, Philippines The Power Sector Assets and Liabilities Management Corporation (PSALM) board has approved the rehabilitation of Unit 1 of the Malaya Thermal Power Plant in Rizal, the state firms president said.

The board has approved the overhauling of Malaya 1. Procurement for the service will be handled by the Bids and Awards Committee (BAC), said PSALM President Emmanuel Ledesma Jr. in a text message Tuesday, August 19.

The bid schedule has yet to be finalized but industry stakeholders are calling for the speedy rehab of the power facility before theLuzon grid runs out of power supplyin the summer months of 2015.

TheManila Electric Company (Meralco), for one, strongly urged PSALM to fast-track the rehabilitation of Unit 1 so that theentire Malaya facilitycan run at its full capacity of 650 megawatts (MW).

PSALM and the Department of Energy (DOE) also want the rehabilitation done before March next year.

DOE Secretary Carlos Jericho Petilla, who sits as vice chairman of the PSALM board, said the board has been continuously meeting on how to fast-track the rehab work.

Technically, the DOE is only one seat in the board. Any decision will have to involve the board, he said in a separate text message.

The PSALM board is headed by finance secretary Cesar Purisima.

In aid of power supplyThe power facility consists of a 300-MW unit with a once-through type boiler and a 350-MW unit fitted with a conventional boiler. It was rehabilitated in 1995 by the Korea Electric Power Corporation (KEPCo) under a 15-year rehabilitate-operate-manage-maintain agreement.

According to Petilla, KEPCo has informed the agency that Unit 1 of Malaya needs to be overhauled. KEPCO is among those interested to undertake the rehab, Petilla said.

The DOE and PSALM said the rehabilitation of the Malaya Unit 1 would help plug the supply deficiency that is anticipated next year. (READ:Power emergency: What it means)

Ideally, Ledesma had said, the rehab of the Malaya Unit 1 should be finished before the scheduled shutdown of the Malampaya natural gas pipeline next year.

TheMalampaya facility will go offlinefrom March 15 to April 14, 2015 to commence Phase 3 of the installation of a platform aimed at maintaining fuel supply to power plants providing half of Luzons power needs.

The shutdown of the Malampaya facility, which, according to consortium members could no longer be rescheduled, worries the DOE and PSALM because the capacity of Malaya is crucial to the power requirements of Luzon.

Based on DOE projections, there will be a deficit of 200 MW next year. Energy supply will be thin by March to May 2015, the months with the highest electricity demand for the year. To address this, Petilla said an additional 400 MW-500 MW capacity would be needed to act as buffer supply during the peak months. (READ:Solving the energy crisis by empowering the people) Rappler.comFor power crisis stories, readhere.

For related state of emergency for power crisis stories, readhere.

Carousel image fromWikipediaPower consumers to carry burden of P62B in settlement claims vs. PSALM?

ByDANESSA O. RIVERA, GMA NewsAugust 26, 2014 7:36pm

More from: http://www.gmanetwork.com/news/story/376495/economy/companies/power-consumers-to-carry-burden-of-p62b-in-settlement-claims-vs-psalmConsumers may have to carry the burden of over P60 billion in settlement claims by disgruntled former employees of the Power Sector Assets and Liabilities Management Corporation (PSALM) to avoid aggravating the looming power crisis in 2015, the Energy secretary said.

Apart from having its assets garnished, a possible option is for PSALM to get at loan to cover the settlement claims so as not to hamper its operations, Energy Secretary Carlos Jericho Petilla told reporters on the sidelines of the Management Association of the Philippines (MAP) General Membership Meeting in Makati City Tuesday.

"DOE's biggest concern is still power. The DAMA's case, whatever liability NPC has, is part of the NPC debt," he said.

"The P62 billion, kung makakautang s'ya para hindi maapektuhan ang operation, i-cha-charge sa tao. How much, I don't know," he said.

Over the weekend, PSALM said it received a court order from the Regional Trial Court (RTC)-Quezon City (QC) garnishing its funds worth over P60 billion.

The RTC QC ordered PSALM to immediately pay P60.24 billion to over 8,000 beneficiaries of Napocor-Drivers and Mechanics Association (DAMA) and P1.81 billion for "lawful fees and costs for the execution of the Supreme Court's Resolution."

The Napocor-DAMA were employees terminated by PSALM when it was restructured in 2003 pursuant to the Electric Power Industry Reform Act (EPIRA).

Notice of garnishment

The notice of garnishment are legally baseless and violate due process, PSALM president and CEO Emmanuel R. Ledesma said in a statement posted on its website Monday.

"If our funds are garnished, our long-term debts would become immediately due and demandable... This will result in operating cash deficit, which will lead to power shortage nationwide," he noted.

PSALM is responsible for the fuel supply and operations budget of state-owned power plants, namely the Malaya Thermal Power Plant in Luzon, Power Barges (PBs) 101 and 102 and Naga Coal-fired Thermal Power Plant in Visayas, and PB 104 in Mindanao. These facilities produce a combined total of 430 megawatts (MW) dependable capacity.

PSALM also provides for the fuel requirements of Independent Power Producer (IPP) plants, namely the Ilijan Natural Gas Power Plant in Luzon, the Zamboanga Diesel Power Plant and the General Santos Diesel Power Plant in Mindanao.

The agency also collects and administers the Universal Charge for Missionary Electrification, which is the source of funds of the National Power Corporation (NPC) off-grid operations.

There's still hope as the PSALM board filed a motion for reconsideration before the Supreme Court last Friday, Petilla said.

"[We'll have to] wait for SC... At the expense na puwede kami ma-contempt. Kapag sumangayon kami, baka tumigil ang planta," he said.

"Pero ang nakikita ko lang dito na way out [ay] dagdagan ang utang. Kung hindi magbabago si SC or i-re-reconsider ng SC na baka mas mababa sa P62 billion, dahil malaking pabigat 'yun sa PSALM," he noted.

Petilla said the biggest threat to the power situation is coming from the people who will garnish PSALM's funds.

"The interest of the public, I think, is more than the interest of employees. I respect that they also have the rights but, in this country, there's no absolute right. It's always what is good for the general public," he said.

Presidential powers

During the MAP forum, Petilla reiterated the need to invoke the Section 71 of EPIRA that gives the President the power to address the shortage by contracting new power plants or renting modular generators.

Last July 21, Energy Secretary Jericho Petilla saidhe recommended that the President declare a state of national emergency on powerto avoid rotating brownouts in Luzon due to a power supply shortage of between 300 to 500 megawatts (MW) starting next year.

With seven months remaining before the summer of 2015, the government still has time to contract new power to avert an energy crisis.

"I will take the cue of the President and those that want this or who don't want this," he said.

Business groups urged the governmentnot to amend the EPIRA but to implement it properlyand focus instead on implementing the law properly.

MAP recently saidgovernment should aggressively push the demand side to undertake energy efficiency measures, urgently implement a voluntary Interruptible Load Program and lift the secondary price cap in the Wholesale Electricity Spot Market.VS, GMA News

More from: http://www.gmanetwork.com/news/story/376495/economy/companies/power-consumers-to-carry-burden-of-p62b-in-settlement-claims-vs-psalm.