3 agencies to help DOE in gencos’ cases

by Lenie Lectura June 4, 2021
https://businessmirror.com.ph/2021/06/04/3-agencies-to-help-doe-in-gencos-cases/

Malacañang has instructed the Energy Regulatory Commission (ERC), the Philippine Competition Commission (PCC) and the Department of Justice (DOJ) to assist the Department of Energy (DOE) in building up cases against 17 power generation companies (gencos) cited for violating energy policies.

According to DOE–Electric Power Industry Management Bureau Director Mario Marasigan, a letter from Cabinet Secretary Karlo Nograles was sent to the agencies concerned.

“We have presented to the Cabinet Assistance System the power outlook and the concerns that we see in the power industry, whereby Cabinet Secretary Karlo Nograles instructed DOJ, PCC and ERC to coordinate with us. We had initial coordination with ERC and PCC while preparing for DOJ,” said Marasigan in a text message.

In April, the DOE said it would refer to the ERC, PCC and DOJ for assistance in enforcement and in building up cases against gencos for their prolonged power plant outages; the grid system operator for not securing enough firm-contracted ancillary reserves (AS); and the distribution utilities (DUs) for not conducting competitive power supply auctions on time.

“We have been working closely with the other enforcement agencies in pursuing options available to us to ensure that unplanned, prolonged, and perhaps even alleged malicious activities of certain players in the energy sector are scrutinized, investigated, and possibly penalized by the ERC, the PCC, and the DOJ,” the DOE said Thursday.

The Energy department, whose chief, Secretary Alfonso Cusi is under fire from senators for having assured them on April 27 there would be no brownouts, also reminded DUs and the system operator of their contracting obligations to address the needed capacity increases for a reliable power system for its consumers.

The Senate Committee on Energy, chaired by Sen. Sherwin Gatchalian, is calling a hearing soon on this week’s spate of power disruptions in Luzon, which Gatchalian said affected 339,000 households in 90 barangays in 60 cities and provinces.

Gatchalian promised to open the inquiry soon after Sen. Manny Pacquiao, in a privilege speech on Wednesday, called out Cusi for “incompetence” and said he cannot pass on the blame simply to private companies as he has command responsibility.

On Thursday, Minority Leader Franklin M. Drilon also rejected what he deemed Cusi’s blame tossing.

Energy Secretary Cusi said he is fully aware of his responsibilities as energy chief and that he has not been remiss in his duties.

“We are aware of our responsibilities and we have been carrying them out,” he said, while lamenting that the criticism “came from partymates,” referring to Pacquiao and Senator Koko Pimentel.


Economic sabotage

Meanwhile, DOE Undersecretary Felix William Fuentebella has said the 17 gencos’ noncompliance with government policies—banning the conduct of maintenance shutdowns in the second quarter, when demand is at peak—is thoroughly being investigated for a possible case of economic sabotage.

For instance, the ERC said 17 gencos breached the maximum allowable unplanned outage days per year.

The 17 gencos are SEM Calaca Power Corp., GN Power Mariveles Coal Plant Ltd., Masinloc Power Partners Co. Ltd., Southwest Luzon Power Generation Corp., Team Sual Corp., SPC Power Corp., Panay Power Corp., SN Aboitiz Power-Benguet Inc. CBK Power Company Ltd., SPC Island Power Corp., First Natgas Power Corp., FGP Corp., First Gas Power Corp., Power Sector Assets and Liabilities Management Corp., Energy Development Corp., Hedcor Bukidnon Inc. and PSALM-Soosan ENS Co. Ltd.

The ERC said 35 units that belong to the 17 gencos have been on prolonged shutdown.

“We are strictly monitoring and reviewing the weekly reports being submitted by the gencos in compliance with our directive pertaining to the Reliability Performance Indices and Equivalent Outage Days Per Year of Generating Units. Based on the examination of our technical group, there are gencos that have breached the maximum allowable unplanned outage days as of April 2021,” ERC Chairman Agnes Devanadera said.

The extended plant outage and power plant derating have resulted in rotational brownouts since Monday, May 31. This even as the DOE assured in April that Luzon will be spared from power outages, saying there is enough supply in the grid.

As of Thursday, the National Grid Corporation of the Philippines (NGCP) projected a total available capacity of 11,601 MW, relative to the projected peak demand of 10,331 MW. This means the Luzon grid is in normal system condition based on NGCP’s advisory issued in the morning.

“There are currently enough power supply reserves to accommodate the projected demand, which has significantly decreased due to adverse weather condition,” said the DOE.


NGCP told to explain

The ERC has also directed the NGCP to explain the causes of delays of 33 transmission projects that were already approved.

“The NGCP’s explanation will shed light on the status and reason/s for the delay of the completion of the 33 transmission projects that we have already approved,” said Devanadera in a statement.

Also, NGCP was directed to comply with the requirement of RA 9136 or the Electric Power Industry Reform Act (Epira) to enter into Ancillary Services (AS) contracts and to update the ERC of the status of its negotiation, if any, of the additional AS, particularly Contingency Reserve (CR).

The NGCP under the Epira, particularly Section 8, in relation to Section 21, has responsibility over the planning, construction and centralized operation and maintenance of its high-voltage transmission facilities, including grid interconnections and Ancillary Services.

The ERC has approved the Ancillary Services Procurement Plan (ASPP) which sets the required level of the AS.

“The completion of the NGCP transmission projects is a crucial element in ensuring the stability of electricity in the entire country. In the same manner, there must be sufficient Ancillary Services Procurement Agreement [ASPA] in place to support the transmission of power capacity and energy from generation sources to consumption loads and maintain the reliable operation of the transmission system,” Devanadera added.

As of December 2020, the DOE said NGCP’s level of firm contracted AS are still way below the requirement of a department circular and the ERC-approved AS Procurement Plan.

The NGCP, for its part, said earlier that the lack of supply hampers the procurement of power reserve.

“If there is no supply provided by generation companies, there is no reserve or there is no ancillary services to be procured,” NGCP counsel for legal and regulatory affairs Ronald Dylan Concepcion told a recent Joint Congressional Energy Commission hearing.

The DOE’s DC2019-12-0018 order mandated NGCP to renegotiate its existing non-firm contracts, as necessary, and comply with the 100-percent firm AS requirement.


DOJ eyes collusion

The Department of Justice (DOJ) willlook into possible collusion among gencos tantamount to economic sabotage following this week’s brownouts.

Justice Secretary Menardo Guevarra told reporters, “We have not received any formal directive from the palace regarding this matter but I will alert the NBI to stand by and prepare to investigate.”

Guevarra’s statement followed DOE’s disclosure that it has presented to the Cabinet Assistance System the power outlook and the concerns that it sees in the power industry.

The DOE earlier said power gencos experiencing prolonged outages on their generation facilities could face anti-competitive behavior and economic sabotage charges for breaching government-enforced laws and policies.

Those likely to be investigated are gencos whose facilities are on extended shutdowns—including those that performed unplanned maintenance that led to rotational brownouts in Luzon.

With Joel R. San Juan and Butch Fernandez