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Salceda reaches deal with Malacañang, DOE to prevent power hikes in Albay
Salceda reaches deal with Malacañang, DOE to prevent power hikes in Albay
Albay Congressman Joey Sarte Salceda said on Saturday, June 26, that he has reached an understanding with Malacañang and Department of Energy (DOE) Secretary Alfonso Cusi to prevent the looming power hikes in Albay due to the province’s overexposure to the spot market, whose power prices spiked this quarter due to thin supply and sharp demand.
This came after Cusi and Senator Christopher ‘’Bong’’ Go, chairman of the Senate health and demography committee, intervened to have the earlier DOE rejection of the power supply agreement reversed.
“Thanks to Senator Bong Go and Secretary Cusi, the Department of Energy (DOE) will issue on Tuesday a certificate of exemption from CSP to APEC for six months. This would enable them to engage in Emergency Power Supply Agreement (EPSA) and buy 100 percent from other suppliers at P6.70 instead of P13.47 at the wholesale electricity spot market (WESM),” Salceda said in a statement.
“This would mean that electricity prices will not just go back to P9.40 from the current P13.20- to as low as P8.40 for July billings,” he added.
Salceda said he has also talked to the Palace through Executive Secretary Salvador Medialdea to ensure that the President is apprised of the situation and clears the agreement.
“This intervention will keep the lights on in Albay, and possibly lower prices. It buys us six months to solve more structural issues with APEC,” Salceda added.
“Thank you to Secretary Cusi for being very open and accommodating of our request,” Salceda said.
In a June 25 letter to Cusi, Salceda requested that the DOE reconsider its May 27 rejection of the request for the EPSA.
“While I recognize the Department’s prerogative, I request your urgent reconsideration of the matter, in light of the extraordinary circumstances that Albay is under. As a result of the decision to deny the request for the COE, APEC/ALECO is now required to source all its power requirements, reaching 40 MW at full demand, from rom the Wholesale Electricity Spot Market (WESM) or now referred to as the Independent Market Operator of the Philippines (“IEMOP”),” Salceda said.
“I am certain the Department understands the implications of having an entire province’s energy requirement sourced from a market with highly volatile prices. The price of purchasing the base load, intermediate and peaking energy requirements from WESM is costly at this time, given the sharp increase in Luzon demand and the simultaneous generation plant outages that tightened Luzon power supply,” he explained.
“Without an EPSA to provide stable supply at predictable prices, Albayano power consumers are forced to pay higher monthly electric power bills due to the full exposure to WESM. Your reconsideration of the matter could protect them from a steep rise in prices, especially given this hour of great socioeconomic need,” Salceda wrote to Cusi.
Salceda also told Cusi that “as one of the architects of the Electric Power Industry Reform Act (EPIRA), I fully understand that the intent of competition rules under the law is to protect the consumer and to maximize their welfare.”
“I also understand that Section 1.1 of the Policy for the Competitive Section Process in the Procurement by Distribution Utilities of Power Supply Agreement for the Captive Market states that PSAs shall be governed by the principle of “least cost manner in ensuring that each distribution utility (DU) is able to meet the demand for its captive market at any given time.””
“Finally, I understand that the same Policy allows the Department to grant a Certificate of Exemption from the conduct of a CSP if the application is for a negotiated procurement of emergency power supply, if the PSA does not exceed one year,” Salceda wrote.
In a statement following his calls with top Energy and Palace officials, Salceda said that he would continue to work towards a more “permanent” solution to the power supply issue.
“APEC is simply overexposed to the spot market, whose intent is really to fill up supply deficits, not be the main source. We need to fix the power supply contracts of APEC. On my end, I will try to make sure that there are no policy impediments to the more long-term solution we come up with. For now, we thank the Palace, Senator Go, and Secretary Cusi for helping us out in this crucial time,” Salceda pointed out.