Friday, January 19, 2018

Meralco, Solar Philippines seek ERC go-signal for supply deal

January 19, 2018
MANILA ELECTRIC Co. (Meralco) and Solar Philippines Tarlac Corp. (SPTC) are seeking provisional authority to implement their power supply agreement (PSA) that will bring down the cost of solar energy to a record low P2.9999 per kilowatt-hour (kWh).
“Considering that SPTC’s solar power plant is expected to achieve commercial operations in the fourth quarter of 2017, an immediate implementation of the PSA would redound to the benefit of the consumers in terms of environmental benefits and would also contribute to the government initiative of encouraging the development of renewable energy in the country,” read the companies’ joint filing to secure provisional authority from the Energy Regulatory Commission (ERC).
They also said the P2.9999 per kWh offered by supplier Solar Philippines to Meralco is “significantly lower” than the prevailing feed-in-tariff (FiT) rates and the lowest tariff offer that the power distribution utility had received thus far for a solar technology.
The ERC has set the hearing on the application next month.
Meralco sought the power supply contract based on its power situation outlook for 2017 and succeeding years where it foresees a peaking capacity deficit in its portfolio because of an expected high demand as well as possible occurrences of scheduled maintenance shutdowns and forced outage of power plants.
Meralco’s distribution development plan from 2015 to 2024 forecasts a capacity requirement that will grow by a compounded average of 3.7%.
Meralco executed the PSA with SPTC on Oct. 6, 2017 for the purchase of electricity generated by the latter’s 150-MW solar farm in Concepcion, Tarlac. The contract called for 75 MW and up to 85 MW from the first to fifth year, then 85 MW from the sixth to 20th year.
The two companies forged the agreement after Meralco on June 28, 2017 invited price challengers to an offer made by another entity at a price bested by SPTC’s lower offer. The original power supplier did not exercise its right to match SPTC’s proposed price.
Based on the provisions of the companies’ power supply contract, if the ERC provisionally accepts the filing for the approval of the PSA by Oct. 20, 2017, then beginning Jan. 26, 2018, Meralco will be deemed to have sourced replacement energy from the wholesale electricity spot market at the cost offered by SPTC.
SPTC’s offered price is significantly lower than the price set by the regulator when the Department of Energy opened solar power for subscription initially at P9.68 per kWh, then at P8.69 per kWh when it expanded the target capacity to 500 MW. The FiT scheme, which guarantees payment of the fixed rate for 20 years, was fully subscribed long before the end-2017 deadline.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Victor V. Saulon

DOE admits lack of consumer protection against oil price hike abuses

Published January 18, 2018, 10:01 PM By Myrna M. Velasco

The Department of Energy (DOE) has been floored when concerned officials indirectly admitted in a Senate hearing that the Filipino consumers are ‘not categorically protected yet’ from abuses or profiteering acts from recent oil price hikes as they have yet to validate and analyze the documents submitted to them by the oil companies.
When quizzed by Senate Committee on Energy Chairman Sherwin T. Gatchalian if the department has established mechanism to prevent profiteering and abuses vis-a-vis the cost adjustments enforced at the petroleum pumps, DOE officials were not able to provide conclusive response.
“We are trying to avoid abuse and profiteering, but how can you avoid that if you’re not ahead of the curve,” had been the senator’s point-blank query to the DOE.
Energy Assistant Secretary Leonido J. Pulido III responded that the department just required two sets of document submissions from the oil companies – one had been on their level or volume of inventories; and two, on product withdrawals.
But when asked by Gatchalian if they have done at least an analysis of the documents as a way to confirm if the price hikes implemented had been prudent and warranted, Pulido noted that they are not done validating the industry players’ submissions yet.
The energy official just assured the Senate energy committee that they will “finish their analysis by the end of the month,” the timeframe when 90-percent of the oil companies’ retail stations would have hiked prices already relative to the enforcement of excise taxes under the Tax Reform for Acceleration and Inclusion Act.
“We’re trying to get it from the DOE if we have mechanism to prevent profiteering, but from what I am hearing right now, it seems we don’t have a mechanism… and if there is any, it’s not timely,” Gatchalian stressed.
The senator added “what I am hearing is: you have information gathering, but there’s no analysis. So how can we assure the public that (industry players) will not take advantage of this ‘extraordinary event’, if you don’t have a mechanism?”
The lawmaker similarly asked that in an event an oil company would eventually be proven to have raised prices not in accordance with the TRAIN Law’s implementation parameters, “can the consumers get a refund?”
Pulido said “that (refund) is a novel idea,” asserting further that “it is difficult, but it can be done.”
But if the end, the department will establish violations or offenses committed by the oil industry players relative to the TRAIN taxes’ enforcement, their licenses could be suspended or revoked, according to Pulido.
Energy officials qualified that payments of excise taxes by the oil companies are done two-pronged: for the importers of finished products, it shall be settled with the Bureau of Customs; and for the refiners like Petron Corporation and Pilipinas Shell Petroleum Corporation, it shall be done with the Bureau of Internal Revenue (BIR) upon withdrawal of products.
As of January 18, the DOE reported that only four companies have hiked prices yet owing to the TRAIN Act – namely Petron, Shell, Chevron Philippines that carries the Caltex brand; and Flying V.
Increases are anticipated to already reach 90-percent of all retail stations nationwide by the end of the month.
As affirmed by the DOE, the TRAIN-induced increases will amount to: P2.97 per liter for gasoline (inclusive of value added tax charges); P2.80 per liter for diesel; P3.36 per liter for kerosene; and P1.12 per kilo for liquefied petroleum gas.

Gas stations that used TRAIN to hike prices of old stock face closure

By Lenie Lectura - January 18, 2018

The government has, so far, identified at least 20 gasoline stations that likely took advantage of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act in January by selling old inventories at prices reflecting the impact of the new tax law, the Department of Energy (DOE) said.

Energy Assistant Secretary Leonido Pulido III said the agency was able to validate that “there were 20-plus retail stations that jacked up their prices from January 8 to 12.” He, however, did not identify the oil firms whose dealers received show-cause letters from the DOE. The agency has given them until January 22 to respond why they should not be sanctioned. Violators, Pulido added, would lose their certificates of compliance and business permits. The DOE will conduct a random inspection of all 6,800 gasoline stations to verify whether the excise tax under the TRAIN Act is being properly imposed. It has told oil companies to submit a daily summary of stock withdrawals starting January 1, 2018, until the depletion of the declared inventory as of end-2017.

Based on January 15 DOE data, there are 245 Petron stations of the 1,845 total Petron stations that already implemented the oil excise tax starting from January 8 to 12; 408 of the 1,119 total stations for Shell from January 5 to 11; and 178 of the total 834 stations for Caltex.

Energy Secretary Alfonso G. Cusi also called a meeting with distribution utilities to discuss the effective and appropriate implementation of the power-related provisions of Republic Act 10963, or the TRAIN.

Specifically, the major items that were discussed are the adjustments due to (a) the value-added tax on the transmission sector; (b) the VAT on the Cooperative Development Authority-registered electric cooperatives; and (c) the excise tax on coal and diesel that are used to fuel power plants.

“We will look into coal contracts and scrutinize provisions as to whether there is a provision on pass-on excise tax,” Cusi said.

He added the meeting would examine the submissions of coal-fired power plants to the Electric Power Industry Management Bureau. “Corollary, the DOE has directed all distribution utilities to require from their power suppliers the basis of any additional charges that may emanate from the Train law. This includes the explanation on the implementation of excise taxes vis-a-vis the minimum inventory requirement for both coal stocks and diesel stocks,” Cusi pointed out.

Napocor completes 47-km transmission line in Masbate

By Lenie Lectura -

THE National Power Corp. (Napocor) has completed the rehabilitation of the 46.59-kilometer Mobo-Aroroy 69 kilovolt transmission line.
“The rehabilitation project allowed the replacement of old wooden poles with concrete and steel to make the transmission line more resilient against typhoons and other disasters,” Napocor President Pio J. Benavidez said.
At the same time, Napocor completed the construction of the 3.17-km extension project of the transmission line. The extension project connected the transmission line to Masbate Electric Cooperative’s (Maselco) 5-MVA substation in Barangay Bangon, Aroroy.
With these, residents of the province of Masbate can expect a better power dispatch. More important, these projects will help reduce Maselco’s power outages and systems losses. Maselco services 71,000 households in the island province.
The rehabilitation and extension cost P151 million. Funds were sourced from the national government’s special allotment release order in 2013 and 2015, respectively.
“The energization of the transmission is a breakthrough, as it has been stalled for long years due to right-of-way issues,” Benavidez said.
As mandated by Republic Act 9136, or the Electric Power Industry Reform Act of 2001, Napocor performs missionary electrification through its Small Power Utilities Group and provides associated power-delivery systems in areas not connected to the main transmission grid.
For this, Napocor operates and manages transmission systems for the island provinces of Palawan, Occidental Mindaoro, Oriental Mindoro, Marinduque, Catanduanes and Masbate.