Petilla: Illegal for PSALM to make spot market bid without power

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Before the High Court, Energy Secretary Jericho Petilla tags as illegal PSALM's spot market bid when it has no ability to dispatch power

ILLEGAL. DOE Secretary Jerichio Petilla said PSALM's bid at WESM despite its inability to dispatch power is illegal. Photo by LeAnne Jazul/Rappler

MANILA, Philippines – The move by the Power Sector Assets and Liabilities Management Corporation (PSALM) to offer a bid at the spot market despite its inability to dispatch power was tagged as illegal by Department of Energy (DOE) Secretary Jericho Petilla before the Supreme Court.

Petilla was questioned by Supreme Court justices on Tuesday, February 11, in relation to the controversial price hike of the Manila Electric Co (Meralco).

Government-owned PSALM placed a bid at the Wholesale Electricity Spot Market (WESM) but didn’t synchronize its Malaya power plant with the power grid. 

“Is this legal? That there is a plant that actually offers an amount yet keeps its breakers open and therefore the offer is taken into consideration in the market, but that plant is unable to dispatch because it is not synchronized to the grid?” asked SC Justice Marvic Leonen.

“It is not legal, and it has been repeated by PSALM several times,” Petilla answered.

The offering of bids without being able to dispatch power once needed by the market was also in violation of WESM rules, said Petilla.

WESM is a central venue for buying and selling electricity; it operates at an hourly trading interval. Power generation companies, which produce power, offer supply bids at WESM. Distribution utilities, which distribute power to residences and businesses, buy in bulk from the market.

WESM prices fluctuate on an hourly basis depending on bids offered by power suppliers.

Malaya power plant

PSALM was earlier criticized for not using the National Power Corporation’s (Napocor) Malaya power plant, which, critics believe, would have mitigated price spikes during Malampaya’s 30-day maintenance shutdown

Meralco was forced to buy power from the spot market which is subject to volatile prices, after the shutdown of the Malampaya gas field and the power plants of firms it had bilateral contracts with.

Meralco has since decried the arbitrary bids offered at WESM. (READ: Meralco decries arbitrary bids at WESM)

PSALM’s lawyer Raoul Creencia, however, argued before the High Court that PSALM’s operation of the Malaya power plant during the period of November to December 2013 was no different from how it operated in previous years.

PSALM, he said, did not trade on November 11 to December 1 at WESM due to technical limitations and market conditions.

He reiterated that the plant had to be offline to avoid monthly losses that would have amounted to P1.3 billion. 

“The reason given to us by PSALM is that it really cannot start, and the reason it can’t actually dispatch [power] is if it runs the entire plant without turning it off,” Petilla said. – Rappler.com

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