DOE to hold power players accountable during forced outages

By Danessa Rivera (The Philippine Star) | Updated February 2, 2018 - 12:00am

http://www.philstar.com/business/2018/02/02/1783625/doe-hold-power-players-accountable-during-forced-outages

MANILA, Philippines — The Department of Energy (DOE) is targeting to implement a causer’s pay policy by mid-2018 to hold power industry players accountable during power interruptions instead of letting consumers shoulder higher electricity costs.

The agency is drafting a circular to issue a causer’s pay policy program on charging incremental electricity cost to the generator that goes on forced outage, DOE Undersecretary Felix William Fuentebella said.

“We have a draft ready for public consultations, but we are targeting to have it signed by June,” he said.

The public consultations will allow the DOE to straighten out and clarify the rules for implementation, Energy Secretary Alfonso Cusi said.

The proposed causer’s pay policy aims to make generation, transmission and distribution companies accountable for causing unwarranted power interruptions instead of passing on the cost to consumers.

Under the proposed policy, the DOE will investigate the technical aspect of the forced outage and identify whether it was triggered or intentional, crime-related, or a result of gross negligence, among others.

Depending on the cause, the Energy Regulatory Commission (ERC) will impose the necessary monetary penalty on the erring power player.

But if the power interruption is proven to be caused by force majeure, power players will not be held accountable.

Earlier this year, the DOE said it is looking at options to unburden consumers from shouldering higher fuel costs when the Malampaya gas facility schedules its maintenance shutdown in the future.

The DOE chief has stressed the importance of maximizing consumer protection from the impact of maintenance or unplanned shutdowns as a policy direction of the agency.

LPG prices cut by P3.15/kg

Published February 2, 2018, 12:05 AM By Myrna M. Velasco

https://news.mb.com.ph/2018/02/02/lpg-prices-cut-by-p3-15kg/

Here is a welcome relief from price increases as a result of the new tax reform law.

The price of liquefied petroleum gas (LPG), the main cooking fuel for households has been reduced by P3.15 per kilogram or a total reduction of P34.65 for the standard 11-kilogram cylinder.

This is reportedly due to the downtrend in the international contract costs as benchmarked on Saudi Aramco pricing.

As of press time, the industry players that advised price cuts were Petron Corporation for its Gasul and Fiesta brands; Solane and Phoenix LPG Philippines, Inc.

The rollback took effect midnight yesterday.

Somehow, the price reduction offsets the P1.00 per kg hike triggered by the excise tax imposition under Tax Reform for Acceleration and Inclusion (TRAIN) Act.

From inception, PSALM logs debt payments reaching P1.47 trillion

Published February 1, 2018, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2018/02/01/from-inception-psalm-logs-debt-payments-reaching-p1-47-trillion/

Since the start of its corporate life at the restructuring of the country’s power sector, state-run Power Sector Assets and Liabilities Management Corporation (PSALM) reported that the level of its debt payments already reached P1.47 trillion, although it is still not enough to tangibly wipe out its liabilities.

In fact, on the company’s assessment as well as of its parent-firm agencies, its liabilities cannot even be stamped out yet at the end of its corporate life in 2026.

In a statement to the media, PSALM noted that its debt settlements comprised of P555.7 billion maturing obligations with independent power producers (IPPs); P567.7 billion principal debts; and R364 billion interest and other charges.

Last year alone, the company indicated that payments of financial obligations amounted to P73.3 billion, accounting for P55.9 billion debts and IPP obligations; and P17.4 billion interests.

It similarly noted that beyond the P73.3 billion it paid in 2017, it settled additional P10 billion dues to the State – chiefly with the Bureau of the Treasury “for its advances to PSALM in 2016 that was utilized to bridge financing gap.”

The company explained that “funds in settling PSALM’s assumed financial obligations are sourced from collections from its power generation, privatization proceeds and universal charge.”

On its mandate of divesting the power assets of its precursor firm National Power Corporation, PSALM stressed that proceeds hovered at P528 billion.

Additionally, universal charge collections from stranded contract costs had summed up to P56.9 billion.

“PSALM’s financial obligations peaked to P1.24 trillion in 2003 from P831 billion in 2000,” the company has emphasized.

ERC paralysis and implications for consumers

February 1, 2018 By Bienvenido S. Oplas, Jr.
http://bworldonline.com/erc-paralysis-implications-consumers/

Despite a significant increase in the Philippines’ power generation capacity in recent years, the country’s installed capacity and electricity production remains small compared to the ASEAN-6 and North East Asian neighbors.

For instance, its installed capacity of 21.2 gigawatt (GW) in 2016 was what Vietnam has about 10 years before. Vietnam now has twice the Philippines’ installed capacity

A reliable and stable supply of energy results in economic development.

More power plants mean more electricity generation; more electricity generate will mean more competition for power supply and hence, lower electricity prices for the consumers.

However, an unfortunate turn of events might prevent the Philippines from realizing this both in the short- and medium-term. The Ombudsman has issued a one-year suspension for four of five Commissioners of the Energy Regulatory Commission (ERC) last Dec. 21, 2017.

The officials were charged with violation of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) in connection with the revised implementation date of the competitive selection process (CSP). The Ombudsman also said the suspended officials favored a few power supply contracts.

With only one Commissioner — Chair Devanadera — allowed to work, here are some of the serious implications and problems.

1. No deliberations and resolutions on applications for approval of power supply agreements (PSAs) and projects for transmission and distribution by the National Grid Corporation of the Philippines (NGCP), distribution utilities, and electric cooperatives. An estimated P1.588 trillion worth of energy-related projects and capital outlays would be affected.

2. The inability to act on petitions for rate adjustments and pass-on charges; consumer complaints, violations of industry players of existing laws and regulations.

3. Non-issuance or renewal of certificates of compliance (CoC) or provisional authorities to operate power plants.

4. The inability to award procurement contracts, like the ERC meter seals and stickers being placed on electric meters of the distribution utilities, among others.

With these problems, among the solutions would be the following:

1. The President should appoint OIC Commissioners to temporarily act on behalf of the four suspended officials until the suspension order has lapsed in late December this year and the suspended officials will be back in office.

2. Despite ERC paralysis, DoE will allow or accredit players with expiring or pending CoCs to operate and trade at the Wholesale Electricity Spot Market (WESM). The required ERC approval of CoCs will resume only when there is quorum already at the Commission. DoE Secretary Cusi said that “about 26 generation companies with a total of 3,314.60 MW generating capacities have expired or have expiring CoCs in 2018… Additional new capacities of at least 720 MWs are also expected to go into commercial operation within the next few months. If not allowed to participate in the WESM, the available electricity supply in the market will be curtailed, which can result in higher market clearing prices.”

4. DoE should also be able to accredit or renew Retail Electricity Suppliers (RES) with pending or expiring licenses, until the ERC paralysis is resolved.

Several government branches and constitutional bodies must always put in mind the welfare of the consumers. The inflationary pressure of TRAIN law (higher oil prices, higher coal generation prices, among others) is already mounting.

The “vested interest” of consumers — cheaper, competitively-priced, and stable energy supplies — should prevail over vested interests of politicians and regulators. There should be more power generation companies and power plants, more electricity distributors and retailers — all competing with each other to meet the consumers’ “vested interest.”