Senator: Power shortfall due to ‘negligence’

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Thursday, January 23, 2014

LACK of monitoring on the part of government agencies concerned and the failure of state-owned 600-megawatt (MW) Malaya thermal power plant to serve its purpose were among the issues discovered during the Senate committee hearing on the power rate mess on Thursday.

"This is about their negligence," said Senator Sergio Osmena III, as he expressed his disappointment over the failure of Energy Regulatory Commission (ERC) Chief Zenaida Ducot to provide the result of their probe on the power rate hike of the Manila Electric Company (Meralco).

It was revealed during the hearing that Malaya did not make an offer in the Whole Sale Electricity Spot Market (WSEM) during the shutdown of the Malampaya gas facility last November 2013 to avoid losing money.


Abelardo Sapalaran, Power Sector Assets and Liabilities Management Corp. (Psalm) trading manager, said Malaya was shut down due to high operating cost and huge losses.

"If that is the case, it would have been better to burn the (Malaya) plant down if it is that costly to operate," Osmena, energy committee chair, said.

The senator said that had the government considered using Malaya, the power supply could have been manageable.

"Our offered price was P45. We were on economic shutdown. We offered bids but without dispatch. This is only to recover our cost. Talaga pong sobrang mahal kung mag o-offer kami," said Sapalaran.

But Senator Francis Escudero said, "Pwede nyo naman sigurong ibigay yan sa 20 or 25 per kilowatt hour. Bakit kayo nag shutdown? The purpose of Malaya is to provide much needed capacity for Luzon and for preventive maintenance. "Ano pa ang gamit ng Malaya kung hindi makakatulong?"

Energy Secretary Jericho Petilla said in an earlier report that the government retained Malaya as backup during supply shortfall.

Osmena, for his part, said he cannot understand why concerned government agencies did not prepare for the power crisis considering that its effect will be felt by millions of power consumers in Metro Manila.

Osmena said that the problem of power supply has become huge due to lack of monitoring and preparation on the part of government.

Petilla said the National Grid Corporation of the Philippine (NGCP) was actually the determining agency as it is one monitoring the spot prices in the market. NGCP is the system operator.

Osmena said that there should be additional changes to the electricity spot market rule to prevent a repeat of the surge in price last December 2013. He said he will recommend changes to the WESM to avert similar incident.

The WESM is a trading platform for electricity where power distributors buy supplies not covered by their bilateral contracts at market prices.

Electric utilities nominate their requirements in the spot market and power plants with the lowest price get first dibs to sell their output.

In the existing rule, all the power plant operators registered with the WESM are required to put a price tag on their generating capacities.

"Daily ang pagtaas ng spot market at hindi kayo nabahala? And there was no action to activate Malaya thermal?" Osmena asked Psalm.

"Tremendous Shortage. And this is because of the fact that not one of these government agencies made any preparation. They should have anticipated but instead they kept saying there was no shortage," he added.

But Petilla said that even before the shutdown of Malampaya gas facility, the price of power is already high.

He said the "must offer rule" was meant to offer their excess generating capacity to the market. The maximum price would only have been reached had there been a power supply shortfall at the time, he said.

Petilla said they are conducting an investigation internally to know the lapses and to analyze each transaction that was made on each particular hour by the players in order to qualify the prices on why they spiked.

He also insisted that the Malaya plant should be kept as an energy security backup for times of energy shortfall.

Petilla said that the country now has 11,400 MW generating capacity but electricity demand is growing by 600 MW yearly.

Senator Juan Edgardo Angara, for his part, said the Department of Energy should plan to ensure enough power for a growing economy and to protect consumers.

Petilla said that the use of Malampaya funds for power subsidy to alleviate the present power rate hikes is an urgent matter that can resolve the present crisis. (Camille P. Balagtas/Sunnex)

Local news

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