Published October 8, 2017, 10:00 PM By Myrna M.
Velasco
The legally-contested action of
state-run Power Sector Assets and Liabilities Management Corporation (PSALM)
terminating the independent power producer administrator (IPPA) agreement for
the supply contract of the 1,200-megawatt Ilijan power facility could unduly
expose electricity consumers to volatile prices in the Wholesale Electricity
Spot Market (WESM).
According to San Miguel Corporation
President and COO Ramon S. Ang, the insistence of PSALM to trade the capacity
of the Ilijan plant into the spot market “is a blatant disregard for the
welfare of power consumers who should be shielded from, not exposed to, its
price volatility.”
South Premiere Power Corporation
(SPPC), which is a subsidiary of the energy unit of San Miguel, had been the
designated IPPA of the Ilijan plant in a privatization exercise undertaken by
PSALM in January 2010.
Since the Ilijan plant is treated as
“base load plant” in the merit order, Ang said “its output must not be traded
in the WESM to protect consumers.”
He further explained that the gas
plant “is used to continuously supply electricity to the grid, including hours
when demand is high,” which is also the time window when prices could spike in
the spot market.
Ang thus pointed out “if we sold to
the WESM, small consumers would have to pay higher electricity bills. Even
businesses, which are the largest consumer of energy, would suffer.”
Beyond that, PSALM’s move to
abruptly discontinue the IPPA deal for Iljan would also affect the power supply
procurement of its major off-taker Manila Electric Company (Meralco), with the
utility firm facing the risk of losing 1,180MW contracted capacity on its
portfolio.
This was stipulated by Meralco on
its intervention plea into the SPPC-PSALM case, stressing that the termination
of the Ilijan IPPA “will prevent it from purchasing electricity from SPPC.”
The utility firm added it “will lose
1,180MW of electricity supply from Ilijan under the terms of the Energy
Regulatory Commission-approved Meralco-SPPC PSA which provides cheaper
electricity to Meralco end-users.”
If that fate of the Ilijan IPPA deal
won’t be reversed, Meralco noted it would be compelled “to purchase electricity
from the WESM to cover for the lost 1,180MW (volume) of electricity which will
expose Meralco and its end-users to the price volatility of the market.”
It has been further noted that
“this is a huge volume that has a great impact in bringing cheaper electricity
to the public,” while emphasizing that “PSALM’s act in terminating the Ilijan
IPPA threatens to remove this benefit from the public.”
“If Meralco is prevented from purchasing
power from the Ilijan plant, this will thwart its efforts in bringing down the
electricity cost for its end-users causing serious and irreparable damage to
Meralco and its customers,” the utility firm added.
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