South Premiere Power Corporation (SPPC), a subsidiary of SMC Global Power Holdings Corporation (SMGP) of the San Miguel group, will resume operations of the 1,200-megawatt Ilijan gas-fired power plant by April next year, in time for the high demand during the summer months.
According to SMC, the plant is currently “undergoing repair works to improve its fuel efficiency and generation ramp rate.”
The company emphasized that after maintenance work, Ilijan plant is expected to restart operations as the LNG (liquefied natural gas) terminal that the company has tolled becomes operational as early as April 2023.
The Ilijan plant had been on shutdown since June this year, after it was turned over to SMGP following the lapse of the facility’s build-operate-transfer (BOT) arrangement with the previous contractor.
SMC conveyed that the plant was compelled to be on "downtime mode" because there is no gas fuel available from Malampaya that can be utilized for it to continue generating electricity, hence, the next recourse is to wait for the availability of imported LNG into the country.
“The 1,200MW Ilijan plant has already been on extended outage since June 2022 following the refusal of Shell Philippines Exploration BV (SPEX) to supply the 70 petajoules (PJ) in banked gas from Malampaya that SPPC acquired from PNOC (Philippine National Oil Company) that same month and, therefore, does not currently form part of its readily available generation capacity,” SMC said.
The conglomerate added “to help address the plant’s current fuel supply constraints, SPPC has offered various options to optimize sourcing of fuel for the Ilijan facility—whether from its own allocation of Malampaya gas or liquid fuel.”
Nevertheless, SMGP also made an earlier offer to Manila Electric Company (Meralco) to run the plant as long as the latter could find gas that will be fed into the facility for electricity generation. One option being explored is to ask Lopez-led First Gen Corporation to share part of its purchased banked gas for the Ilijan plant.
Meanwhile, the ERC indicated that as of Wednesday, Dec. 7, it “has not received any official communication from Meralco on the reported cessation of supply of 670MW committed under the power supply agreement (PSA) with SPPC.”
ERC Chairperson Monalisa C. Dimalanta stated “it is not yet clear to us at this point, if SPPC served a notice of PSA termination or merely a suspension of supply considering that the case before the Court of Appeals filed by SPPC involving the said PSA is still for final resolution.”
The regulatory body is awaiting action from the agency’s statutory counsel, the Office of the Solicitor General (OSG), after the matter was referred for undertaking the appropriate legal remedy.
The ERC qualified that based on Meralco billings for November 2022, the 670MW capacity of the Ilijan-anchored PSA “accounted for 13.4-percent of Meralco supply and priced at P4.2455 per kilowatt hour” while average settlement price at the Wholesale Electricity Spot Market (WESM) stood at P8.47 per kWh.
Given recent developments, the ERC reminded Meralco that the cessation of supply from a bilateral contract or PSA "does not excuse the distribution utility from its obligation under Section 23 of Republic Act No. 9136 or EPIRA (Electric Power Industry Reform Act) to supply electricity in the least cost manner to its captive market” in reference to the segment of consumers who cannot exercise their power of choice yet in the retail market.
ERC further noted that the matter of termination of the SPPC PSA, with the grounds, procedure and timelines all provided in the contract, were discussed extensively by the Commission.