PSALM, DOE to hold talks on Malaya plant

Business Mirror

26 Jan 2014 

 

Written by Lenie Lectura

THE Private Sector Assets and Liabilities Management Corp. (PSALM) and the Department of Energy (DOE) plans to discuss options for the 600-megawatt (MW) Malaya thermal power plant.

“We are going to sit down and everything that was discussed already will be discussed. We have to decide what we can do. We are going to sit down and explore all the options,” said PSALM President Emmnuel Ledesma Jr.

In a hearing last week, senators have identified the said government-owned facility to have been allowed to operate in November to help ease the power price hike caused by the maintenance shutdown imposed of the Malampaya power facility.

Options reportedly being considered for the Malaya facility include privatization or retention to serve as backup plant.

The power plant was reportedly put on economic shutdown and not on maintenance shutdown because PSALM sees it as a losing proposition if it participated in the Wholesale Electricity Spot Market (WESM).

Ledesma, at the Senate hearing last week, said using the Malaya power plant would have caused a loss of P5 to P7 per kilowatt-hour for a total of P650,000 to P910,000 for one unit. The two units would translate to hourly losses of P1.3 million to P1.8 million. “For a 31-day [period], that would be equivalent to roughly P967 million to P1.35 billion in losses,” he said.

“If PSALM were to bid Malaya’s output into the WESM, the most logical bid price offer is for it to get scheduled for dispatch at a price where it could recover its production cost,” added Ledesma.

The PSALM official said the only other way for the government to dispatch Malaya’s output was if the National Grid Corp. of the Philippines (NGCP) tells it do so. But Ledesma argued that the NGCP never assigned Malaya as a must-run unit as the latter did not detect any shortfall in the supply of electricity in Luzon.

Senators, however, stressed that the spike in power rates could have been avoided if only the Malaya power plant was allowed to operate.

“That doesn’t make sense to me,” said Sen. Sergio Osmeña III, who pointed out that if the power plant was too costly for the government to operate then the facility should have been burned instead.   source

Lenie Lectura