DOE to release list of power deals covered by SC ruling

Danessa Rivera (The Philippine Star) - May 29, 2019 - 12:00am

https://www.philstar.com/business/2019/05/29/1921635/doe-release-list-power-deals-covered-sc-ruling

MANILA, Philippines — The Department of Energy is coming out with a list of power supply agreements (PSAs) affected by the Supreme Court decision that requires all power distributors to conduct competitive bidding for power deals.

In an interview yesterday, DOE Assistant Secretary Redentor Delola said the list of affected PSAs would be determined by the Energy Regulatory Commission (ERC), which will be transmitted to the DOE.

“We’ll have to make the list public so that everybody will know which PSAs are affected.

 All of the PSAs affected and considered terminated will have to undergo CSP (competitive selection process),” Delola said.

The recent SC decision invalidated all PSAs signed after Nov. 7, 2015, the original implementation of the CSP policy, which requires distribution utilities and electric cooperatives to undertake competitive bidding to secure PSAs with generation companies.

The ERC implemented the CSP policy on April 30, 2016 to give power players a transition period to comply.

It said over 90 PSAs had been hit by the CSP directive, including the seven contracts of Manila Electric Co. (Meralco) with over 3,500 megawatts (MW) in capacity.

“The decision of the Supreme Court is very clear. For Meralco, they have to do it fast. Don’t waste time,” said Energy Secretary Alfonso Cusi.

Meralco earlier warned of massive implications in the power industry if the SC decision would be implemented as it is.                

DOE awaits ERC list of power supply deals requiring CSP

By Lenie Lectura - May 29, 2019

https://businessmirror.com.ph/2019/05/29/doe-awaits-erc-list-of-power-supply-deals-requiring-csp/

ENERGY regulators are keen on fulfilling their mandate to institutionalize the Competitive Selection Process (CSP) for power supply contracts—as a recent Supreme Court ruling reminded them—and are holding meetings on the matter, a Department of Energy (DOE) official said.

Energy Assistant Secretary Redentor Delola said the DOE is waiting for the Energy Regulatory Commission (ERC) to send a list of power supply contracts that need to undergo the CSP as ordered by the high court.

The ERC is in the best position to determine which power supply agreements (PSAs) entered into between a power supplier and distributor are covered by the SC ruling.  “As to which contracts are invalidated or terminated because of the decision, it is the ERC that knows that, not the DOE,” said Delola.

Delola said Energy Secretary Alfonso Cusi and ERC Chairman Agnes Devanadera have already discussed the matter and another meeting is scheduled soon.

Once the list is turned over to the DOE, Delola said the agency will inform the concerned parties that they have to undergo CSP immediately. “We’ll have to make the list public so that everybody will know which PSAs are affected,” added Delola.

The SC earlier ruled that “all PSA applications submitted by distribution utilities [DUs] to the ERC on or after 30 June 2015 shall comply with the CSP in accordance with the 2018 DOE Circular [DC2018-02-0003] and its Annex ‘A.’”

Cusi said that in consonance with the DOE’s mandate, his office has been consistently formulating policies, programs, rules, and regulations toward this end. He said the SC ruling affirms the agency’s long-standing conviction on the fundamental role of the CSP as a mechanism to ensure transparency and fair competition in the procurement of power supply. It was designed to protect the consuming public from power rate spikes, pass-on charges and avert predatory practices.

“The highest court of the land has unequivocally spoken. Thus, in adherence to the SC’s judgment, we call for the exigent conduct of CSP for the PSAs of DUs, which include electric cooperatives and private corporations like Meralco. Power development in our country, particularly in Luzon, has been at a standstill for three years. We can no longer afford any further delay. We need to act now with extreme urgency to make up for the lost time,” said Cusi.

As indicated in the 2018 DOE CSP circular, the DOE will closely oversee the competitive bidding process to guarantee that the exercise is conducted in an open, transparent, effective, efficient and equitable manner. For its part, the ERC will work alongside the DOE by enforcing and implementing the relevant policies formulated, as well as all pertinent rules and regulations issued by the DOE. However, should the process grossly fail, the DOE said it will not hesitate to enact all necessary measures to uphold the integrity and completion of the CSP. 

First Gen eyes completion of 2 LNG plants in 2023

By Lenie Lectura- May 29, 2019

https://businessmirror.com.ph/2019/05/29/first-gen-eyes-completion-of-2-lng-plants-in-2023/

STA. RITA, Batangas—First Gen Corp. wants to start construction of two new gas-fired power plants as early as next year and finish it by 2023, just in time for when the Lopez-led firm would have put up its liquefied natural gas (LNG) terminal within the First Gen Clean Energy Complex.

First Gen EVP and Chief Commercial Officer Jonathan Russell said after the groundbreaking ceremony of its LNG terminal project that two gas plants will have a combined capacity of 1,200 megawatts (MW).

“Next to the San Gabriel site, we have two additonal vacant lots which can take two new units…about 1,200 MW,” Russell said.

Ideally, construction for the two gas plants must be finished in 2023.

“There’s a need for new capacity by 2024 so we’d like to start construction of those soon so that they can start to deliver power using LNG by 2024. We need to build them by 2023 so we can start them in 2020,” he said.

But a final investment decision (FID) has yet to be reached concerning the two new plants.

“We haven’t taken a final investment decision yet because we haven’t decided which contractor to choose,” Russell added.

First Gen already operates four gas-fed power plants with an aggregate capacity of about 2,000 MW. These are the 1,000-MW Santa Rita, 500-MW San Lorenzo, 414-MW San Gabriel and 97-MW Avion.

On Tuesday morning, First Gen broke ground for its $700-million to $1-billion LNG import terminal.

The project will be developed in two phases. The first includes new unloading facilities for LNG carriers with capacities ranging from 40,000 to 177,000 cubic meters; a 200,000-cubic meter LNG storage tank with a maximum send-out capacity of up to 5 metric tons per annum (MTPA); two LNG truck loading bays; as well as provisions for a future LNG carrier loading system for vessel capacities ranging from 5,000 to 40,000 cubic meters.

The second phase includes an additional 200,000 cubic meters; LNG storage tank; increasing its send-out capacity up to 7 MTPA; two additional LNG truck loading bays; and an LNG carrier reloading system.

The company is targeting to finish the LNG terminal before gas from the Malampaya gas facility runs out in 2024. When he delivered his speech during the ceremony, Energy Secretary Alfonso Cusi said he hopes First Gen will be able to finish construction during the Duterte administration.

“I think that might be a little challenging,” said Russell when asked if the LNG facility can be put up in 2022 “because we don’t need the LNG until the Malampaya finishes. We want to get it finished before Malampaya expires. We are hoping to get the project finished in 2023, but we certainly want to start it before the end of the term,” he said.

First Gen will tap lenders to complete the financing of the LNG project.

“We’re in discussions with several financing institutions. In the long term, we hope we can take out project financing. It could be 60 percent to 70 percent financed. We need to get on this with this project. If we don’t start to move, the risk is that 3.2 GW of capacity just disappears from the grid because of no gas. So there’s a real imperative to get moving. We need to work with partners to help make that happen,” Russell added.

First Gen has partnered with Tokyo Gas Co. Ltd. for the LNG project. Both signed a joint development agreement (JDA) in December last year.

“Given the joint development agreement between Tokyo Gas and First Gen, we consider that the holding of a Kagami Biraki ceremony is an appropriate way for First Gen and Tokyo Gas to celebrate our collaboration, the completion of the significant predevelopment work, and the commencement of the next phase of the development of the project,” said Federico R. Lopez, chairman and CEO of First Gen.

First Gen is still on the lookout for interested firms willing to join the project. Discussions with potential partners are still ongoing.

Once completed, the LNG terminal will allow the country to import LNG and ensure a continuing stable supply of clean energy once the Malampaya gas field is depleted. The entry of LNG will encourage both industrial and transport industries to consider it as a replacement to more costly and polluting fuels.

“This groundbreaking is putting the Philippines in the value chain of LNG,” Cusi said.