Western Mindanao Power Corp. (WMPC), a diesel power plant in Zamboanga City expects to have its fuel supply run out in the next few weeks, which could cause potential blackouts in the area.
In a statement made by Alcantara-led Alsons Power Group on Wednesday, May 22, the WMPC said it has already reported to the government agencies the possibility of ceasing operations due to the near exhaustion of the plant’s supply.
Zamboanga City is situated at the end of a long transmission line and is 270 kilometers (km) away from the nearest base load power station. This would pose significant challenges to the city, because without reactive power support from the WMPC, the city’s voltages would drop and would lead to power fluctuations or brownouts during peak hours.
While there was a non-firm agreement with the National Grid Corporation of the Philippines (NGCP), this deal expired last month.
The non-firm Ancillary Services Procurement Agreement (ASPA) would secure a consistent power supply in Zamboanga City and its neighboring areas by allowing WMPC to deliver vital power support to maintain grid stability in Mindanao.
According to Alsons, the NGCP awarded a new firm ASPA in April of last year, however is waiting for approval from the Energy Regulatory Commission (ERC).
“Under a non-firm ASPA, power plants are not guaranteed to provide ancillary services to the power grid at all times,” Alsons explained.
Because of this, throughout the first three months of this year, the WMPC faced P50 million worth of losses because plants with non-firm ASPAS have been disregarded. Meanwhile, plants with a new firm ASPA contract received provisional authority from the NGCP.
WMPC Vice President and Business Manager for Plant Operations Jose Luis Angco urged for an ERC approval for the agreement, otherwise, the plant would not have the necessary funds to recover the losses and obtain the needed fuel to operate the nearly exhausted plant.
“Operating a diesel plant is costly. Without an approved and acceptable ASPA, we will incur unrecoverable losses that affect our ability to replenish our fuel stock. This will force us to reduce and eventually halt our operations,” he stressed.
Despite the expired agreement, the NGCP has put the WMPC as a must-run unit that would provide vital ancillary services, especially during the summer months incurring yellow and red alerts.
“Currently, WMPC operates as a Must-Run Unit participating in the Wholesale Electricity Spot Market (WESM). However, this setup is not sustainable. We anticipate incurring significant losses after the summer season when the plant might be dispatched for voltage correction at a reduced rate of between P3 to P6 per kilowatt hour,” said Angco.
Moreover, the ERC noted the increasing fuel costs of diesel plants, especially since they safeguard the areas from blackouts during high demand for power brought by the heat index.
Alsons emphasized that operating diesel plant operations can not be feasible without an ASPA contract because they would need to recuperate from the struggling operational costs.
“They are often contracted only during peak demand periods and are compensated only a fraction of the necessary charges, making these payments insufficient to cover fuel and other operational expenses throughout the entire year,” the power firm added.
Meanwhile, the WMPC still hopes to provide the necessary ancillary services to support the NGCP in supplying Zamboanga’s power throughout the year.
Subsequently, the Zamboanga City Electric Cooperative has also shared its concerns about the expired agreement between the NGCP and the WMPC, amplifying the need to secure a stable power supply.