ERC to act on deferred cost recoveries for GSPA of Malampaya gas
At A Glance
- The new GSPA was flagged by the ERC for required review before any pass on of cost adjustments will be enforced – with the regulatory body invoking that cost recoveries must be made transparent to the ratepayers.
As supply in the Luzon grid remains wobbly, the Energy Regulatory Commission (ERC) indicated that it will finally act on the deferred pass-on of cost recoveries for the new gas sale and purchase agreement (GSPA) on fuel for power generation lifted from the Malampaya gas field.
“On the GSPA, we’re already working on that especially now that we badly need supply. And since Malampaya is indigenous, of course, there is statutory preference for indigenous fuel,” ERC Chairperson Monalisa C. Dimalanta said.
She added that the parties-in-interest “already made their submission based on our last order, and that’s already being evaluated by our team, so hopefully, we’d be able to settle that soon.”
The new GSPA was flagged by the ERC for required review before any pass on of cost adjustments will be enforced – with the regulatory body invoking that cost recoveries must be made transparent to the ratepayers.
Given the deferred pass on of costs from the new GSPA, Razon-led Prime Energy, which is the operator of the Malampaya gas field, has already raised concern on supply of gas for its off-take deal with First Gen in the months ahead.
The GSPA was signed in January this year between Prime Energy and First Gen; and the initial $2.3 million collected from consumers as adjustment in the contract cost, based on the new formula for the GSPA, had been ordered by the ERC to be paid back to consumers.
The corresponding refund for that preliminary cost recovery in gas supply had been pegged at P0.05 per kilowatt hour (kWh) – and that was ordered to be reflected in the bills of Manila Electric Company (Meralco) in March.
The unrecovered costs from the GSPA, however, could compromise the financial position of the Malampaya consortium-members; and that could cripple them from continuously supplying gas if there would be further delay in the regulatory approval.
Malampaya gas is being supplied to at least four power plants of First Gen – the 1,000-megawatt Santa Rita, 500MW San Lorenzo, 414MW San Gabriel and 97MW Avion plants – and all have been critically feeding capacities to supply-strained Luzon grid.
The Santa Rita and San Lorenzo facilities still have prevailing power supply agreements (PSAs) with Meralco; while its San Gabriel and Avion generating plants generally have merchant capacities being offered to other off-takers as well as in the spot market.