ERC slashes WESM market fees

Published July 4, 2020, 10:00 PM by Myrna M. Velasco

https://mb.com.ph/2020/07/04/erc-slashes-wesm-market-fees/

Refund ordered

The Energy Regulatory Commission (ERC) has reduced the market transaction fees of the Wholesale Electricity Spot Market (WESM) by about 50-percent to P447.470 million from P896.410 million, which in turn will result in cost reduction when passed on to consumers.

The regulatory body similarly directed applicant-Philippine Electricity Market Corporation (PEMC) to refund over-collections in market fees that it raked in from allocation that was still anchored on the 2015 ruling of the regulatory body.

ERC Chairperson Agnes T. Devanadera noted that “in our evaluation, the Commission found that there are certain market transaction fee components that are unnecessary and unreasonable.”

She similarly specified there had been supporting documents that PEMC had failed to provide, which should have served as justification of the fees being sought for.

On the ordered refund, Devanadera emphasized that the payback must be “apportioned among all the Luzon and Visayas participants,” which are the trading participants in the linked spot market of the two power grids.

The chief regulator said the refund “shall be implemented over 12 months beginning in the next billing month upon receipt of the (ERC) decision, and shall be reflected as a separate line item in the WESM monthly billing statement.”

Corresponding to the ERC ruling, PEMC has also been ordered to submit its plan of action for the implementation of the refund scheme, as well as the mandated adjustment to the market transaction fees. The action plan is to be submitted within 10 days from the receipt of the decision of the regulatory body.

At the same time, the ERC ruled that the stature of PEMC is a government-owned and controlled corporation (GOCC) at its current standing as a non-stock corporation, hence, its functions must be imbued with public interest.

“As such, we have evaluated PEMC’s application on the basis of such GOCC classification,” the ERC chief stressed.

The market fees are being paid by trading participants in the spot market. And given the reduced allocation for PEMC, which in turn shall be shared with current WESM operator Independent Electricity Market Operator of the Philippines (IEMOP), the costs to be shouldered by market participations will be lower.

The ERC further stipulated that in its evaluation of the spot market fees’ application, it established that “PEMC’s actual budget utilization of certain items is lower than the proposed budget for the same.”
For that reason, the regulatory body explained that it approved certain components of the market transaction fees “based on actual expenses incurred” by the spot market operator.  

SMPC re-schedules P3.7-B capex to 2021

Published July 3, 2020, 10:00 PM by Myrna M. Velasco

https://mb.com.ph/2020/07/03/smpc-re-schedules-p3-7-b-capex-to-2021/

Owing it to realities that this year will be an extremely difficult stretch for the company, the Consunji-led Semirara Mining and Power Corporation (SMPC) indicated that it will be re-scheduling P3.7 billion worth of capital expenditure (capex) projects to next year due to “unprecedented disruption” posed by the coronavirus pandemic.

SMPC Chairman and CEO Isidro A. Consunji announced during their July 3 annual stockholders meeting that despite the deferment of this year’s programmed capex, the company remains in a strong financial position to withstand the devastating economic impact of the health crisis.

 “Though cash flows are tight, we believe we can manage,” he stressed, noting that the firm would “be able to meet cash-fixed cost obligations to creditors and dues to the government.”

Consunji added the company has P5.0 billion worth of short-term loans and P16 billion worth of long-term financial obligations that it intends to pare this year, and it will be partly utilizing internally generated cash for that.

On top of that, he said, “we have more than enough credit lines that we can tap,” emphasizing that the company has P39 billion unused credit line as of end-March this year.

SMPC similarly paid P5.3 billion cash dividend to its shareholders this March 2020, and Consunji stated that in line with their prudent step for cash preservation  the company would be able to meet its minimum cash dividend obligation to shareholders” for next year.

The firm said it will also defer hiring for non-core positions; reduce non-essential business expenses and it shall opt for disposal of non-core assets.

Maria Cristina C. Gotianun, president and chief operating officer of SMPC, further reported that the company successfully completed the P10 billion life extension program for their 600-megawatt Sem-Calaca Power Corporation (SCPC) coal-fired power plant in Batangas and had been able to bring back and uprate the generating efficiencies of the two units of the facility at the level of their 300MW installed capacities.

The generating unit one of the plant returned to commercial operations in September last year; while the second unit had been synchronized back to the grid in May this year.

On the 20-percent drop in SMPC’s income last year, Gotianun said profitability had been pulled down by the SCPC plant’s shutdown last year; despite the higher electricity spot market prices and the all-time high generation of its other power plant – the Southwest Luzon Power Generation Corporation – which turned in an output of 2,070 gigawatt hours (GWh) last year.

At the company’s Semirara coal mine, she noted that “we accomplished the fastest large-scale mine rehabilitation initiative in the Philippines.” Although for this year, the tumbling international coal prices may still largely affect overall bottom line.

And while the company concentrates on keeping operations afloat while sorting out efficient cash preservation, Gotianun emphasized that their other key focus would be the welfare of their employees – including the need to ensure their benefits as well as health and safety, especially those who are manning their operating assets.

At the height of the lockdown within March to May, the company said it released P350 million worth of salaries and pro-rated 13-month pay to guarantee that their workers will have cash resources to survive the financially crashing blow of the pandemic.