State-run Power Sector Assets and Liabilities Management Corporation (PSALM) will be filing a motion for reconsideration on the P980,400.00 penalty imposed by the Energy Regulatory Commission (ERC) on forced outages violation of its newly privatized 650-megawatt Malaya thermal power facility.
The company said it was “very surprised” when it received the ERC ruling that meted out fines on the ‘unplanned shutdowns’ of the Malaya plant’s Unit-2, because in the regulator’s assessment, the facility breached the prescribed limit of forced outages prescribed for the industry players.
“ERC declared PSALM administratively liable for having exceeded the allowable unplanned outages cap per year set for the Malaya plant in violation of Article V, ERC Resolution No. 10 series of 2020, consequently ordering PSALM to pay the penalty of P980,400.00,” the state-run firm conveyed.
Atty Irene Besido-Garcia, president and CEO of PSALM, lamented that “penalizing PSALM would be unfair because the Malaya plant is actually past its economic life already and it suffers from continuous deterioration in terms of reliability and efficiency.”
As noted, the ERC decision was “in connection with the investigation of the circumstances that caused the red alert and yellow alerts that happened on May 31, 2021 to June 2, 2021.”
PSALM pointed out that unit 2 of the Malaya plant “has not been in operation since Mach 3, 2021, long before the red and yellow alert incidents.”
It thus argued that “there is no sufficient ground to justify the shutdown of Malaya thermal power plant-unit 2,” adding that “PSALM cannot be blamed for having caused the subject red and yellow alert” – or the condition in a power grid when power reserves would already fall below the required levels.
The government-run firm similarly cited public knowledge that the Malaya power facility “is a very old plant and is plagued with obsolescence issues which cannot be addressed, despite PSALM exerting utmost due diligence.” Unit 1 of the plant was commissioned commercially in 1972; while unit 2 was on-line since 1979.
PSALM recounted that it has “openly expressed the need to rehabilitate the facility to improve its capacity and efficiency, but has no funding to do the rehabilitation works.”
It qualified that on the turbulent incidents of yellow and red alerts in Luzon grid last summer, the Malaya plant was at its divestment process, hence, that already prevented PSALM from carrying out any changes in the facility’s state of operations.
“Any expenses shouldered by PSALM to improve the condition of the plant after the sale will expose PSALM to audit findings of the Commission on Audit,” the state-run company stressed.