Energy Secretary Carlos Jericho L. Petilla said he is amenable to penalties that may be imposed against state-run Power Sector Assets and Liabilities Management Corp. (PSALM) by market operator Philippine Electricity Market Corporation over “fake bids”.
“They (PSALM) should be penalized even now… they (PSALM) asked: what about our penalties? So we said, that shall be discussed,” the energy chief has noted.
It can be recalled that PSALM admitted it has been putting up “fake bids” for its 650-megawatt Malaya plant in the Wholesale Electricity Spot Market (WESM) in the past two years.
He emphasized that the penalty impositions were fleshed out during talks on the government’s mandate for PSALM to run the thermal facility during the summer months.
When PSALM president Emmanuel R. Ledesma Jr. accidentally confessed in a Senate hearing that they have been violating market rules given their ‘hoax bids’ and non-synchronization of Malaya to the grid, such ignited raps of ‘special treatment’ because all private generation companies are being penalized under the WESM’s must-offer rule (MOR) if they withhold capacity.
Petilla stressed though that some ‘balancing measures’ are being studied given the impact of such penalties on PSALM’s balance sheet and the probabilities that consumers may eventually shoulder them in their electric bills.
“While we’re looking at energy, the DOF (Department of Finance) since the finance secretary is the chair of the PSALM Board is also looking at (PSALM’s) financials,” he said.
The energy officials have been criticized for trying to escape accountability even if they messed up the power industry’s supply situation in November and December.
The penal provisions of the Electric Power Industry Reform Act (EPIRA) prescribe “dismissal from service” and even disqualification from seeking elective office if government officials would be proven to have been negligent or have committed anti-competitive behavior in the power market.
Following the state-run firm’s monumental blunder of not running the Malaya plant during the Malampaya shutdown, the government earlier hinted that options are already being explored whether to keep or privatize the diesel-run power facility.
PSALM is the owner of the Malaya plant. It has an operation and maintenance (O&M) agreement with SPC Power Corporation for the power plant, but this raises questions as to why the government has been spending P550 million annually for the O&M deal when the plant is not being run.
Even in the supply-demand forecast of system operator National Grid Corporation of the Philippines (NGCP), the capacity of Malaya – expectedly at 610 megawatts – was treated as ‘available capacity’.
Thus, in the graph that was being shown by Petilla in Congress, it appears that there was adequate supply during the Malampaya shutdown. But if Malaya’s capacity of 600MW will be taken out from the forecast, it will manifest that supply will be very tight and the system barely had reserves.
In 2010, when the Malaya plant was ran, it was able to soften prices in the WESM because the facility was called upon as must-run unit (MRU) and the settlement price it got for such was way lower than the spiky rates observed this 2013. source
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