News Column

Psalm denies violating rules

February 13, 2014

By Madelaine B. Miraflor, The Manila Times, Philippines



Feb. 13--The head of the Power Sector Assets and Liabilities Management Corp. (Psalm) denied on Wednesday the claim made by the country's energy chief during an oral argument held in the Supreme Court on Tuesday, that Psalm violated spot market rules.

During the Supreme Court en banc session on Tuesday, Energy Secretary Jericho Petilla pointed his finger on Psalm, saying that the entity went against the Wholesale Electricity Spot Market (WESM) rules as a result of Malaya thermal power plant's failure to distribute its required electricity load during the Malampaya natural gas field shutdown in November.

It was earlier pointed out that the failure of Malaya to dispatch its energy load at WESM may have resulted to the P62 per kilowatt-hour (kWh) generation charge, which eventually caused a P4.15 per kWh-increase in Manila Electric Co.'sDecember 2013 billings.

In a text message, Emmanuel Ledesma Jr., Psalm president, denied that the entity violated spot market rules, citing that it has informed the Philippine Electricity Market Corp. (Pemc) about Malaya plant's inefficiencies way before the Malampaya shutdown was held. Pemc is the operator of WESM.

"I submit that we have not violated the WESM rules because of our jurisdiction. The law does not intend or compel the impossible," he said.

According to him, Psalm explained to the Market Surveillance Committee (MSC) of Pemc some time in June 2013 its technical and financial reasons for not trading Malaya in the Wesm, in response to the latter's request for a "mere clarification on the open breaker status when not run by the NGCP [National Grid Corp. of the Philippines] as MRU [must-run unit]."

Ledesma told the Pemc that the technical limitations of Malaya, including slow start-up time and low fuel replenishment rate, make it a sheer impossibility for Malaya's output to be always traded through the WESM bidding process.

"If Malaya's energy is traded commercially and runs at its full capacity of 650-megawatt, it can run continuously only for 28 days. It will then take around three months for Malaya to refuel and fully operate again, despite round-the-clock refueling while running," he said.

"During this three-month period, Malaya's compliance with its more important responsibility in ensuring energy security as an MRU [must-run unit] that can sustain a longer operation is put to risk as Malaya will not be ready, in the event it is needed to avoid brownouts or for grid voltage support given its proximity to Metro Manila," he further explained.

Psalm claimed that Pemc has not responded to its letter regarding Malaya until now.

Not only Psalm

During the continuation of the oral arguments on the Meralco power rate hike, Petilla also told the High Tribunal that Psalm is now under investigation and could be penalized if proved it committed anti-competitive behavior.

However, Petilla indicated that it's not only Psalm that could have triggered the unprecedented power rate hike.

"Actually, it can be other players too. There is a gap between SO [system operator] supply and MO [market operator] supply. That gap less outage and ASPA [Ancilliary Services Procurement Agreement] is the volume not offered. We are trying to find out who they are and their reasons for offering their capacity," Petilla said in a text message.

"Any violation on RTD [real-time dispatch] and must offer affects market competition. However, if they have reasons behind the violation, then it can be justified. ERC [Energy Regulatory Commission] is the body that hears anticompetition, so all Psalm has to do is justify their actions. Just as the same each violation carries a penalty," he further said.

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Source: Manila Times (Phillipines)


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