Tuesday, January 23, 2018

DOE acts to avert summer blackouts



Published By Myrna Velasco

To avert a possible power shortage during the summer months, the Department of Energy (DOE) has allowed power plants without certificates of compliance (COCs) to operate and sell their capacity at the Wholesale Electricity Spot Market (WESM).
“The Department of Energy and the Wholesale Electricity Spot Market agreed to allow power generation companies with expired COCs or with pending COC applications with the Energy Regulatory Commission (ERC) to operate and trade in the WESM,” Energy Secretary Alfonso G. Cusi said.
The decision was anchored on Cusi’s “assurance that he will not allow any disruption in the country’s power supply as a result of the delay in the processing of applications before the ERC, including COC applications, due to the suspension of its four Commissioners.”
Power plants, before getting into commercial operations, are required to be thoroughly assessed and validated on their technical compliance as well as on parameters of cost recovery, because that will set the required level of reliability for the country’s power system.
In the ERC’s process, technical validation being done at power plants alone up to the completion of documentary requirements and processes would take 2-3 months, hence, it portends a not-so-promising summer months for Filipino consumers when it comes to electricity supply.
Cusi said “the move aims to protect electricity consumers by preventing disruptions in WESM transactions while the ERC issue is being sorted out.”
He added that the decision was arrived at in a Resolution that was cemented by the board of directors of the Philippine Electricity Market Corporation (PEMC), the operator of the electricity spot market.
“The paramount consideration is the overall protection of public interest and the security of the supply of power,” Cusi said, adding that “this is needed for the Philippines to meet its economic targets.”
The energy chief stressed that “this should take precedence over administrative issuances especially when an administrative body is unable to act.”
Power plants with 2,977.89-megawatt capacity have to renew their permits to operate while those with 1,971.49MW capacity have pending COC applications with the ERC.
It has been prescribed under the Electric Power Industry Reform Act (EPIRA) and the corresponding rules of the restructured electricity sector that if power facilities with expired COCs will inject capacity into the grid so they can sell at the WESM, they are liable for penalties.
Energy Undersecretary Felix William Fuentebella argued that “old plants with expiring COCs are supposed to file for renewal six months prior to expiration,” noting that with that as a process, these COCs could already be “deemed approved, so there are no penalties because these are deemed approved.”
He cited ERC Resolution No. 16 series of 2014 as legal ground, which stipulates that “COC is deemed approved when ERC fails to act on the same.”
He qualified though that these are still up for validation. “What I am driving at is: We will look into the details based on these rules and other options available under the law.”
Fuentebella added the DOE “will have to fill the gap from now until the new Commissioners come in.”
Under the DOE-PEMC resolution, it was specified that “power generation companies with expired COCs can continue trading upon proof of submission of their application for the renewal of their COC with the ERC.”
Further, the department emphasized that “new plants will also be permitted to trade or submit offers to the WESM upon proof of completion of testing and commissioning and other requirements for the issuance of a COC.”

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