PIPPA resists DOE proposal to amend power contracts

DOE wants power supply contracts to include provisions for replacement power in cases of planned or unplanned outages of power plants

RESISTING AMENDMENTS. PIPPA says its contracts have already been signed, making them legal and binding.

MANILA, Philippines – The Philippine Independent Power Producers Association (PIPPA) said it had reservations with a Department of Energy (DOE) proposal to revise signed power supply contracts with distribution firms and electric cooperatives, with amendments meant to include replacement power in cases of planned or unplanned shutdowns of power plants.

On the proposal, PIPPA president Luis Miguel Aboitiz remarked, “Those contacts are signed. I don’t think you can change those contracts. They have to talk to each individual party as to whether they want to change their contracts.”

The Energy Regulatory Commission approved the contracts entered by the companies, making the contracts binding.

The proposal for revisions raises the possibility of increased electricity prices, though Petilla said the power supply would be adequate. 

PIPPA is against the proposal not only due to a possible power rate increase, but also because it is not sure where it can source this reserve power.

Aboitiz noted, “If you put back-up power, what’s going to be the cost? If you go by historical cost, it’s still expensive. So, if you include back-up power, it will not only raise the price. Question is where are you going to buy back-up power?”

Aboitiz also said that a proposal to source reserve power from the Wholesale Electricity Spot Market would be “a very big risk.”

Petilla countered the reaction, noting that price adjustments can be predicted should power generators increase their rates. He added, “If they increase the rates, ERC will still review it and take into consideration the type of plant, etc.”

PIPPA is comprised of 28 power producers, with members supplying power to Meralco. Meralco signed power supply agreements with the following PIPPA members: Sem-Calaca Power Corporation, South Premiere Power Corporation, San Miguel Energy Corporation, Masinloc Power Partners Company Ltd. and Therma Luzon Inc. – Rappler.com

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