PSALM blames technical limitations of Malaya for not trading in WESM

Posted at 02/13/2014 8:25 AM

MANILA - The Power Sector Assets and Liabilities Management Corp. (PSALM) on Wednesday said it should not be blamed for not dispatching the energy load of the Malaya thermal power plant when it was needed last year.

PSALM President Emmanuel Ledesma instead blamed the power plant’s technical limitations—slow start-up time and low fuel replenishment rate—for not complying with the must-offer rule of the Wholesale Electricity Spot Market (WESM).

“The technical limitations of Malaya make it a sheer impossibility for Malaya to be always traded through the WESM bidding process,” said Ledesma.

Malaya, if it had traded its power in the WESM at its full capacity of 650 megawatts (MW) for 28 days, would take three months to run again. The power plant, which was recently exempted from the must offer rule and, instead, declared as a must-run unit (MRU), could not run when needed.

“After one month of full operation through trading in WESM, there will have to be three months of non-operation and if there is a need for NGCP [National Grid Corp. of the Philippines] to run Malaya as MRU during this period, Malaya cannot run,” Ledesma said.

During this three-month period, Malaya’s compliance with its more important responsibility of ensuring energy security is put to risk as the facility will not be ready in the event it is needed.

“Fuel replenishment rate cannot keep up with the consumption rate, and there are fuel delivery limitations,” added Ledesma.

This decision of PSALM not to dispatch the load of Malaya even when it made a bid on the WESM constitutes a violation of the WESM rules, said Energy Secretary Carlos Jericho Petilla.

The energy chief said Malaya was placed on an “open breaker status” which means the power plant actually made an offer but it was not able to dispatch when asked.

Ledesma said the illegality of PSALM’s “open breaker status” started in August 2012 but clarified that this illegality has not yet been established in accordance with due process in the proper forum.

In June 2013, PSALM explained to the Philippine Electricity Market Corp. (PEMC) Market Surveillance Committee (MSC) the technical and financial reasons for not trading Malaya in the WESM.

PSALM was asked by PEMC to clarify the open breaker status of the Malaya power plant when not run by the NGCP as MRU. To date, Ledesma said the PEMC MSC has yet to respond to PSALM’s letter.

Prior to this letter, however, PSALM has already emphasized that the ERC—and not the PEMC—“has the original and exclusive jurisdiction” over all cases involving disputes between and among participants in the energy sector and all cases contesting rate, fees, fines, and penalties imposed by the ERC in the exercise of its function to promote competition, encourage market development, ensure customer choice and discourage/ penalize abuse of market power in the restructured industry.

“PSALM in fact has brought this jurisdictional issue to the Supreme Court in relation to a different case,” Ledesma added.

The ERC has asked PSALM to provide an explanation to the open breaker status issue last month.