PSALM hit for not dispatching Malaya power

Posted at 02/11/14 10:13 PM

MANILA – Government-controlled Power Sector Assets and Liabilities Management (PSALM) committed anti-competitive behavior when it did not dispatch power from the Malaya Thermal Power Plant despite a bid offer it made with the Wholesale Electricity Spot Market (WESM) during the shutdown of the Malampaya natural gas platform last November that had caused less power supply.

This was the position taken by energy chief Jericho Petilla before magistrates of the Supreme Court (SC) during the continuation of oral arguments on Tuesday on several petitions assailing Meralco's unprecedented P4.15 per kilowatt hour (kwh) rate adjustment, where the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) were heard.

PSALM manages and controls 600-megawatt capacity Malaya, intended only to be a "must-run" plant to address insufficiency in power supply due to its age and the high fuel cost required to run it.

Malaya bid at the WESM during the Malampaya shutdown but did not dispatch power or was not injecting power into the national gird at the time, causing power cost to spike at P62 per kwh; P62 was Therma Mobile's (TMo) bid, as directed by Meralco, through their power supply agreement (PSA).

Meralco insists it directed TMo to bid at the WESM's highest allowable price of P62 during off-peak hours so that TMo may not be dispatched.

TMo's P62 per kwh bid offer, however, became the clearing price for all power generation companies because Malaya did not dispatch.

Petilla said Malaya's action was illegal and ran counter to the very essence of WESM's must-offer rule, which is for all energy suppliers to bid and dispatch power in order to ensure sufficient supply, and, consequently, prevent high energy costs.

"It is not legal and it has been repeated by PSALM several times," Petilla told the high court.

Under WESM rules, anti-competitive behavior includes "physical withholding or the refusal to offer or sell or schedule the maximum available output."

PSALM said it cannot run industrial diesel-powered Malaya on a regular basis, except as a contingency measure, because running the aging plant shall cost government an estimated P1.3 billion per month or P1.8 million daily.

In 2013, Malaya was operational 8 times (56 days); 32 times (151 days) in 2012; 8 times (28 days) in 2011; and 44 times (267 days) in 2010.

PSALM lawyer Raoul Creencia told justices of the high court that Malaya is "the devil for its production cost."