Thursday, January 23, 2014

Energy execs on skyrocketing power rates: Duh


 (The Philippine Star) 

MANILA, Philippines - Energy officials, including the energy secretary and the industry’s chief regulator, are still clueless on why power rates shot up to unprecedented levels in November and December.
Energy Secretary Jericho Petilla and Energy Regulatory Commission (ERC) chairman Zenaida Ducut could not provide the House of Representatives energy committee with answers on why power rates skyrocketed.
They told the committee chaired by Mindoro Oriental Rep. Reynaldo Umali that their separate investigations, which have taken more than a month, are still ongoing.
“I think you have to give us the answers soon because extraordinary events like the November and December increases are bound to happen,” Umali said.
“How can you expect the Supreme Court to resolve this issue and the matter of collusion if you yourselves still do not have answers?” he asked.
Petilla said he is puzzled until now on why rates shot up.
“We have a better situation in the latter part of 2013 than in 2010, when the Malampaya natural gas facility was shut down for annual maintenance,” he said.
“And yet in 2010, prices in the wholesale electricity spot market were just in the P10-P12-per-kilowatthour range. In November and December, WESM trading prices hit the P62-per-kwh cap,” he added.
He admitted that he still could not explain why and how this happened.
He said there is no sufficient basis to suspect collusion among WESM traders in the latter part of last year.
Ducut submitted an “initial report” on her agency’s inquiry, “but what we have are preliminary findings and no conclusions yet.”
“Yes, I am reading it just now, and after several pages, I can tell you that it’s a non-report,” Akbayan Rep. Walden Bello told her.
The ERC report shows that the commission has two “preliminary findings.”
The first finding was that the supply situation between Oct. 26 and Dec.25, 2013 was “a factor which contributed to the historical high bids being accepted as clearing prices on several trading intervals (in WESM).”
The second was: “In turn, factors that affected the supply situation were plant outages and non-offer by plants.”
The report said it would take the ERC more time to “collect, prepare, validate and assess data,” including prices and volumes offered in WESM by power producers, their contracted capacity, volume generated and dispatched and other information.
Ducut blamed the slowness of her agency’s investigation to lack of competent personnel.
She said the ERC has only four wholesale market investigators.
She said her agency has been trying to recruit more electrical engineers, “but no one wants to take our P9,000 monthly salary.”
Camarines Sur Rep. Felix William Fuentebella asked Petilla and the Power Sector Assets and Liabilities Management (PSALM) Corp. about the Malaya power plant in Rizal, which he said did not trade electricity in WESM in November and December, when supply was tight.
PSALM president Emmanuel Ledesma admitted they made “non-offers” since running the plant would have meant losses of P1.3 million to P1.8 million per hour which would have to be passed on to electricity users.
“My mandate from the PSALM board was to cut losses and pare down Napocor (National Power Corp.)’s debt,” he said.
He said he did the right thing, though WESM rules require participants to trade whenever there is tight supply.
There were other power producers that refused to trade and in effect hoarded electricity, Melinda Ocampo, president of Philippine Electricity Market Corp., which runs WESM, told the House committee.
But she said they are still in the process of identifying these producers.
Meralco counsel Rey Espinosa said they believed they obtained the “least cost” of electricity for their customers in November and December.
He said Therma Mobile, an Aboitiz power plant, supplied them with electricity at P7 per kwh during peak hours, while the same producer offered a price of P62 in WESM for off-peak hours.
“You should ask others, like PEMC, why their P62 price was accepted, not us,” he said.   source

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