July 14, 2020 | 12:01 am
THE Energy Regulatory Commission
(ERC) has imposed a P1-million fine on a power generation unit of Lopez-led
First Gen Corp. for supposedly offering its supply at an “anti-competitive”
price.
The listed energy company apprised
the stock exchange on Monday that its wholly owned subsidiary Prime Meridian
PowerGen Corp. (PMPC) was served with a notice of violation of Section 45 or
the anti-competitive behavior clause of Republic Act No. 9136, also known as
the Electric Power Industry Reform Act.
On Aug. 16, 2017, the second unit of
PMPC’s 97-megawatt (MW) Avion natural gas power plant in Batangas City deviated
from its usual offer price, raising it to P32 per kilowatt-hour (kWh) at one
interval from the average price of P5.35/kWh for previous intervals.
Avion had done so to prevent its
final 1-MW block of registered capacity from getting dispatched, as it
refrained from offering less than the 50.3-MW real-time dispatch schedule it
was given in two separate intervals that day. The Wholesale Electricity Spot
Market (WESM) rules state that a generating plant cannot shy away from its
real-time dispatch schedule by more than -3%, or by 1 MW, whichever is higher.
“By trying to withhold its 1-MW
capacity, Avion not only undermined the competition in the market, but also
distorted the market price by setting the price at a level that was not
reflective of the marginal cost of satisfying the demand in the market,” the
ERC said in a 10-page decision signed on July 10.
According to the power generator,
due to high ambient temperature during two dispatch intervals, the second plant
unit’s maximum generation was at 49.08 MW and 48.85 MW, which do not fall
within the prescribed limit set by WESM.
The ERC said that Avion cannot
justify its action by claiming its compliance with the market rules, pointing
out that it could have dispatched supply within the allowable limit without
raising its price, based on the plant’s data.
Its alleged intent not to be
dispatched, the ERC noted, goes against the kind of competition it seeks to
harness via the spot market. “This particular behavior caused a distortion in
the market price which Avion profited from,” it added.
Moreover, the regulator said the supply
offer is deemed a market manipulation when Avion allegedly made it appear that
it had produced to the extent of its plant’s registered capacity, “when in
fact, it has not.”
“PMPC is in the process of reviewing
the decision,” First Gen said.
On Monday, shares in First Gen fell
5.01% to close at P23.70 each. — Adam J. Ang
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