PSALM mulls WESM trading, open access option for undisposed capacity

Manila Bulletin
January 5, 2012, 3:09am


MANILA, Philippines — The Power Sector Assets and Liabilities Management Corporation (PSALM) is already studying in advance the marketing strategy for its ‘undisposed capacity’ upon the lapse of its extended supply contract with Manila Electric Company (Meralco) by the end of this year.


The options being weighed seriously by the company will be trading the generated capacity of its residual facilities at the Wholesale Electricity Spot Market (WESM) or seek bilateral contracts if the rules on open access and retail competition will allow them to do so.


“Upon expiration of the Meralco contract, PSALM has the option to trade the excess capacity in the WESM or it may enter into new bilateral contracts if allowed by the government,” PSALM president Emmanuel R. Ledesma Jr. has noted.


The company, however, must be properly guided by the provisions of the Electric Power Industry Reform Act under Section 47 (j) which bars state-run National Power Corporation (NPC) from entering into new power supply contracts. Being NPC’s successor-company, this policy may also be applicable to PSALM.


Ledesma emphasized that “PSALM will evaluate all available options with the goal of minimizing liabilities and maximizing revenues, noting that such steps will ultimately benefit consumers in the form of lower universal charges.”


“If open access pushes through this year, PSALM can strategically participate in the market and enter into contracts, with rates sufficient to cover its operating costs,” the company chief executive has noted.


He explained that by selling the generated volumes at a rate in accordance with prevailing market prices, “PSALM will no longer have to incur additional liabilities.”


PSALM has been pushing the privatization of its remaining assets and contracts, but several hurdles are being thrown its way in accomplishing such mandate.


In Luzon, there are still a number of supply contracts that it will need to privatize, including that of the Casecnan and Caliraya-Botocan-Kalayaan hydro power plants. The company also plans to sell later the Malaya thermal power facility which was turned over to it by the Korea Electric Power Company (KEPCO) last year.


Similar asset divestment plans are being cast for its remaining facilities and contracts in Visayas and Mindanao.