ERC hints ‘pricing play’
The country’s giant power firms have been tagged as the culprits in last week’s rotational brownouts with “forced outages’ of their power plants going beyond the time allowance prescribed by the Energy Regulatory Commission (ERC).
In a Congressional hearing on Friday, ERC chairperson Agnes T. Devanadera further hinted of “pricing play” as the secondary price cap in the Wholesale Electricity Spot Market (WESM) had been hit 418 times this year. A ‘play’ in the market angle is also being scrutinized by the regulatory body given the price spikes that will then be punishing consumers with higher electric bills.
“So there’s now some ‘play’ or there’s some difference in having the high prices,” the ERC chairperson stressed, emphasizing that while there had just been two instances of red alert and 10 yellow alerts in the system, “the secondary price cap kicked off 418 times in 2021 while in 2019, it only kicked off three times.
In the official ERC document submitted to the House Committee on Energy, the power companies listed to have longer-than-permitted forced outages in their electric generating facilities include Aboitiz Power Corporation; AC Energy Corporation of the Ayala group; SMC Global Power Holdings Corporation of the San Miguel group; Semirara Mining and Power Corporation (SMPC); Panay Power of Global Business Power Corporation, a subsidiary of Manila Electric Company; First Gen Corporation; Energy Development Corporation; CBK Power Company Ltd., which is jointly owned by Japanese firms Electric Power Development Co. Ltd. (J-Power) and Sumitomo Corporation; state-run Power Sector Assets and Liabilities Management Corporation (PSALM); and SPC Power Corporation.
As reported to Congress, electric generating units that breached their allowable forced outages include GNPower Mariveles Units 1 and 2 which is a joint venture of Aboitiz Power and AC Energy; Ambuklao Unit 1 of SN Aboitiz Power and then Manolo Fortich hydro plant units 2, 3 and 4 of Hedcor Inc. of the Aboitiz group; the Calaca units 1 and 2, as well as unit 2 of Southwest Luzon Power Generation Corporation of SMPC under the Consunji group; and unit 1 of Masinloc coal-fired plant of SMC Global Power; then Sual units 1 and 2, also of SMC Global Power but operated by Team Energy Philippines.
Other plants with excessive forced outages had been: modules 10, 30 and 40 Santa Rita, module 50 of San Lorenzo and module 70 San Gabriel plants of First Gen; Panay Power units 4 to 10 of Global Business Power; Kalayaan hydro unit 4 of CBK Power; Power Barge 104 units 2 and 4 as well as Panay diesel power plant of SPC Power; and the Agus 2 (units 1, 2 and 3), Agus 6 (units 1 and 2) and Malaya unit 2 of PSALM; and Unit 1 of the Nasulo geothermal plant of EDC.
The ERC specified that in the evaluation of the power plants and pricing, it is employing 2019 as a comparative year because that was relatively a ‘normal year’ for supply-demand dynamics in the country’s power system. ERC also said that 2019 was the year when consumers were distressed with a string of brownouts stretching from April to July.
The primary price cap of P32 per kilowatthour, the highest price for capacities traded in the spot market, was also breached. Thus, a secondary price cap has to be administered in the WESM.
“The secondary price cap was imposed because this is a mechanism, so that if there are sustained high prices, it will be capped or it will be pegged at a certain level; and during this time on April 29, 2021, we saw that and the days before that. Particularly on April 27, there was a supply dip of 4% due to the unplanned outages and these were the outages that we have been referring to, so that was beyond what was approved,” Devanadera emphasized.
She qualified that the power generation companies already started submitting explanation on their unwarrantable forced outages this year, but the industry regulator maintained it would dig deeper as to the real cause of the power plant problems.
The common reasons provided by the GenCos had been the delayed or non-arrival of spare parts they needed for maintenance of their generating units; travel restrictions enforced on their foreign consultants; as well as the impeded movement of their people who are needed to carry out repair works at plant sites.
“But will the ERC just take these explanations or letters hook line and sinker? ERC as the regulator will have to pursue the investigation and we are now looking into the supporting documents and evidence regarding the allegations and grounds that were given to us by the power plants. We are at that stage now,” Devanadera noted.
If the culpabilities of the power plant owners will be established and proven, the Department of Energy (DOE) stipulated that cases, including economic sabotage raps, will be filed against them.
Energy Undersecretary Felix William B. Fuentebella stated that the department is asking the assistance of the ERC, Philippine Competition Commission (PCC) and Department of Justice (DOJ) “for enforcement assistance and case build-up on any violation of laws and other policies by the industry players.”
The energy official warned “We would even go up for economic sabotage considering that this is a very delicate industry – that any outage and their violation of policies could result in major damage to the economy, so it even goes as far as that.”
Meanwhile, consumer advocacy group Laban Konsyumer Inc. (LKI) has pushed for the Anti Red Tape Authority (ARTA) as the independent prober for power plant outages investigation. The investigation by ARTA should include all the 17 power plant owners earlier issued notices of violation by the ERC. ERC should defer to ARTA to ensure the probe by an impartial judge.
LKI President Atty. Vic Dimagiba, who attended and participated the House Committee on Energy Hearing last Friday, June 4, said that DOE should be part of the entities to be investigated.
LKI questioned the DOE data alleging of “mismanaged data” that should have shown clear red alerts planned from May 28 to June 10 but DOE was using April 14, 2021 to show no red alerts.