PSALM: Malaya plant can’t always run when needed
PSALM says the plant has slow start-up time and low fuel replenishment rate

NO DISPATCH? PSALM reportedly avoided as much as P1 billion in losses by keeping the Malaya plant offline during the Malampaya shutdown. File Photo from AFP.

MANILA, Philippines – The Power Sector Assets and Liabilities Management Corporation (PSALM) said Wednesday, February 12 that it should not be blamed for not dispatching the Malaya thermal power plant’s energy load when people needed it last year.

Emmanuel Ledesma, president of PSALM, said the power plant’s slow start-up time and its low fuel replenishment rate were to blame for their non-compliance to the must-offer rule of the Wholesale Electricity Spot Market (WESM).

Ledesma added, “the technical limitations of Malaya make it a sheer impossibility for Malaya to be always traded through the WESM bidding process.”

He explained further that, if the Malaya plant traded its power at the WESM at its full, 650-megawatt (MW) capacity for 28 days, it would take 3 months of non-operation to run again.

The power plant recently earned an exemption from WESM’s must-offer rule and instead became a must-run unit.

A must-run unit must provide needed power supply on real-time basis or on a particular schedule deemed necessary by WESM system operator National Grid Corporation of the Philippines (NGCP) to ensure reliability of power supply in the grid, especially when there’s a shortfall.

The must-offer rule requires all generation companies registered in WESM to declare and offer their maximum generating capacities to prevent capacity withholding.

Energy Secretary Carlos Jericho Petilla said PSALM’s decision not to dispatch Malaya’s energy load despite bidding in the WESM constituted a violation of WESM rules.

Petilla said Malaya was on an “open breaker” status, meaning the plant actually made an offer but didn’t dispatch energy when asked.

Ledesma countered, saying PSALM’s “open breaker” status has since started in August 2012, clarifiying that the illegality of this has yet to be established in accordance with due process in the proper forum.

PSALM explained to the Philippine Electricity Market Corporation (PEMC) Market Surveillance Committee in June 2013 the technical and financial reasons behind its decision to not trade Malaya in the WESM, in response to the PEMC MSC’s May 2013 letter. PEMC is the spot market operator.

In the letter, PEMC asked PSALM to clarify Malaya’s status as an “open breaker” plant when not run by the NGCP as a must-run unit. Ledesma said the PEMC has, to date, not yet responded to PSALM’s letter.

Prior to the letter, PSALM emphasized that the Energy Regulatory Commission (ERC) rather than the PEMC “has the original and exclusive jurisdiction” over all cases regarding disputes between or among members of the energy sector.

The ERC also holds jurisdiction over contesting fees, fines, penalties, and rates.

Ledesma added that PSALM has “brought this jurisdictional issue to the Supreme Court in relation to a different case.”

The ERC has requested an explanation from PSALM regarding the “open breaker” status issue in January. –

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