By | Jan. 07, 2014 at 12:02am
Power producers have opposed the proposal of the Energy Department to amend the supply contracts of Manila Electric Co. and establish a backup power capacity.
“I don’t think you can change those contracts,” Philippine Independent Power Producer Association president Luis Miguel Aboitiz told reporters, adding the contracts had already been signed and approved by the regulator.
PIPPA groups the country’s biggest power producers whose members are also suppliers of Meralco.
Among the suppliers that signed power supply agreements with Meralco are Sem-Calaca Power Corp., South Premiere Power Corp., San Miguel Energy Corp., Masinloc Power Partners Co. Ltd. and Therma Luzon Inc.
“If you put backup power, how much is it going to be? If you go by historical cost, it’s going to be very expensive,” Aboitiz said.
Energy Secretary Carlos Jericho Petilla earlier said he wanted the power supply agreements between power generators and distributors amended to include replacement power that could be used during planned and unplanned shutdown of generation plants.
Petilla conceded the proposal would likely increase the price of power under current agreements, but this would ensure the adequate supply while mitigating price spikes at the spot market.
“I’ve said this a long time ago, and I will issue a policy but I have to consult because I don’t want to go against ERC [Energy Regulatory Commission], a policy that all contracts, whether planned or unplanned, should be covered by replacement [power],” Petilla said.
Aboitiz, however, said there was the question of, “where are you going to get reserve power?”
Petilla said the proposal would likely generate concerns in the sector but said this could be among the possible solutions to a scenario similar to the December electricity price spikes.
“The generators said they will have to raise prices but at least we can predict the price. If they increase the rates, ERC will still review it and take into consideration the type of plant, etc.,” he said.
“I would go to convert all existing all PSAs…They will renegotiate for approval with ERC. I am not here to take the role of ERC. I just want the consumers protected and the generators will not have the burden to look for replacement power,” Petilla said.
Petilla said power generators could estimate the price of the replacement power given the historical movement in prices, including the WESM rates. source
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