‘Burn gov’t plant if not helping consumers’

Osmeña says the government must decide whether or not to keep the state-owned Malaya as a security plant or close it down

'DYNAMITE MALAYA.' Senators criticize government agencies for failing to use the state-owned Malaya power plant to bring down the prices of electricity and help consumers. Photo by Albert Calvelo/Senate PRIB

MANILA, Philippines – “Why don’t you burn or dynamite the plant and sell it for scrap? You’re fooling a lot of people.”

Senate Energy Committee Chairman Sergio “Serge” Osmeña III took energy officials to task for failing to promptly use the state-owned Malaya thermal power plant in Rizal to help bring down the price of electricity.

At the resumption of the Senate hearing into the power rate hike of Manila Electric Company (Meralco) on Thursday, January 23, Osmeña said the government’s decision to keep the old plant without using it during times of emergency was a “conflict of policy.”

He said one such emergency was the power shortage last November to December that led to the rate hike. The scheduled shutdown of the Malampaya gas field and unscheduled shutdowns of other power plants forced power distributor Meralco to buy expensive power from the Wholesale Electricity Spot Market (WESM). (READ: INFOGRAPHIC: How WESM affects your electricity bill)

By his calculations, Osmeña said that using the Malaya plant could have significantly brought down prices in WESM by at least P20. As a result, the burden passed on to consumers would have been lower.

Officials of the state-run Power Sector Assets and Liabilities Management Corporation (PSALM) explained that they did not dispatch power from Malaya to avoid incurring additional losses. These losses would have been passed on to consumers through the universal charge. Malaya is under PSALM.

Osmeña told them, “That’s totally irrelevant. You kept the plant in case of emergency. An emergency occurred but you did not want to use the plant because you don’t want to add charges. It doesn’t make sense to me.”

Senator Francis Escudero echoed Osmeña. “So anong purpose, silbi ho sa atin ng Malaya? Wala sa ngayon kasi ayaw ninyong malugi.” (So what is Malaya’s purpose for us? None because you don’t want to incur losses.)

This is not the first time energy officials were under fire for failing to tap Malaya to reduce the rate hike. The issue was also raised during the Supreme Court oral arguments and the House of Representatives probe into the hike earlier this week.

In the Senate hearing, PSALM department manager Abelardo Sapalaran admitted that they bid in WESM even if Malaya is unable to supply power only to comply with the “must-offer” rule in the spot market.

Sapalaran clarified that Malaya was not on maintenance shutdown but was on “economic shutdown” because of the company’s financial woes.

This prompted Escudero to ask about the purpose of Malaya, “So irrelevant, balewala?” (So it’s irrelevant, useless?)

Energy Secretary Jericho Petilla admitted as much. “I saw that Malaya is really a headache. They’re perennially offering [in WESM] but they are not considered because [the players] know they won’t be dispatched.”

Petilla said he is studying issuing a circular considering Malaya as a must-run unit. 

Osmeña said he was “not happy” with the answers of the agencies on Malaya.

“The administration has to make up its mind. Is Malaya going to be used as a security plant or not? If not, close it down. You cannot say it will bid in WESM and then they won’t run it. It will affect the other peoples’ bids,” Osmeña said in an interview after the hearing.

The Senate is investigating the P4.15 per kilowatt-hour (kWh) rate hike of Meralco, the biggest power rate hike in recent history. Meralco was set to implement the increase in 3 tranches starting December but the Supreme Court issued a temporary restraining order (TRO). (READ: 13 things Meralco consumers should know about the hike)

Meralco vs PSALM, finger-pointing

Osmeña also castigated the PSALM, Department of Energy (DOE), Energy Regulatory Commission (ERC), and National Grid Corporation of the Philippines (NGCP) for “disclaiming responsibility” on Malaya.

PSALM President Emmanuel Ledesma said Malaya only ran from December 2 to 10 because NGCP never informed PSALM that there was a shortage.

In turn, NGCP officials said they issued only one alert because data from WESM showed there was no shortage last November.

Osmeña said, “You made a mistake because the market reflected there was a shortage. That was the job of NGCP to issue warnings in advance that we will have a tight situation on such a day, yet you issued only one alert on November 15.”

Meralco and PSALM also blamed each other for contributing to the rate hike.

Meralco general counsel Ray Espinosa said, “Why is Malaya not synchronized with the grid? It distorts the behavior of market participants. We need to address that.”

PSALM’s Ledesma shot back, pointing to Meralco’s instruction to power generator Therma Mobile to bid 100 megawatts at the WESM ceiling price of P62 per kWh. Meralco drew criticism in the House hearing over this move.

“Why did Meralco bid P62 when there was supply? In our hearing in Congress, I remember that was discussed. How come now, I am hearing different things?”

What happens when SC decides?

Senators though were more concerned about how the government agencies and power companies will respond to the Supreme Court’s decision on the power rate hike.

Escudero and Senators Antonio Trillanes IV, Cynthia Villar and Pia Cayetano asked about reports of possible blackouts in summer as a result of the TRO.

Petilla said the matter was a “commercial problem” that Meralco and power generators can negotiate on. “I don’t want to say ‘bite the bullet’ but probably they can agree about it. It’s only two months.”

In case Meralco will have to impose the rate hike on consumers, Escudero suggested that the power distributor stagger the charges for a longer period of time to lighten the burden on consumers. Meralco was open to the suggestion.

Osmeña said the Senate cannot wrap up its investigation because the ERC has yet to submit its report on allegations of collusion in the rate hike.

The ERC missed its December 30 and January 15 commitments to submit the results.

ERC Chairperson Zenaida Ducut could not respond to Osmeña’s question on when it can finish the report. The House also criticized Ducut for the delay.

Osmeña asked, “Are you hiding something?”

Ducut responded, “We’re just asking for more time.”

Osmeña said, “How much more time? Unless you’re waiting for info from the US or Antarctica, I’m sure you can give me a definite date. For goodness’ sake.”

Ducut said, “We will commit to a period of 3 months.”

Osmeña exclaimed, “Three months? The next problem is coming in the April [summer months]. You keep on moving it back. ASAP is not good enough. Give me a date.” – Rappler.com


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Petilla: Tight suply till 2016 but no power failure