PSALM justifies uncertainty in Malaya plants

operations
by Myrna Velasco
October 15, 2014
As the government has been exhausting all excuses defensible or not so it can opt for emergency powers on the
countrys power supply next year, the Power Sector Assets and Liabilities Management Corporation (PSALM) is
adding voice to the controversy by laying down probable precarious operation of the 650-megawatt Malaya thermal
plant next year.
The technical difficulties encountered by Malaya thermal power plant make its availability and dependability during
the Malampaya shutdown from March to June 2015 uncertain, the state-run firm President Emmanuel R. Ledesma
Jr. has noted.
PSALM has emphasized that since the last shutdown of the Malampaya gas production facility in NovemberDecember last year, the plants generating unit 1 already logged more than 208.07 hours of operations and 2,301.38
hours for generating unit 2.
It can be culled though that this is the same controversial plant that was on open breaker status at that time,
meaning it has not been synchronized to the grid when it was supposedly expected to help ease supply tightness on
those periods.
Since March this year, a Circular issued by the Department of Energy (DOE) has specifically lined up the Malaya
plant to be just called for dispatch as must-run unit (MRU) as may be determined or declared by system operator
National Grid Corporation of the Philippines.
PSALM justified that the Malaya plant is an aging facility, clocking in a life span of 40 years already. It comprises of
two units with a dependable capacity of 290-MW and 340MW each.
Malaya unit 1 has been non-operational since March 21, 2014, due to material loss of HP (high pressure) turbine
rotating parts that led to the high turbine vibration, PSALM said.
The generating units overhaul is scheduled to commence latter part this year and is expected for completion in the
next 6 to 8 months.
PSALM averred further it is very likely that, upon actual opening of the unit by the contractor, a more extensive
damage would be discovered.
The company qualified that even if the repair of Malayas unit 1 will turn out successful, its purported 100-percent
reliable operation cannot be guaranteed, given its age, continuous and longer dispatch at full capacity, and fuel
delivery constraints.

Rappler
Burn gov't plant if not
helping consumers
Osmea says the government must decide whether or not to keep the stateowned Malaya as a security plant or close it down

Ayee Macaraig
Published 7:36 PM, Jan 23, 2014
Updated 11:57 PM, Jan 23, 2014

DYNAMITE MALAYA.' Senators criticize government agencies for failing to use the state-owned
Malaya power plant to bring down the prices of electricity and help consumers. Photo by Albert
Calvelo/Senate PRIB

MANILA, Philippines Why dont you burn or dynamite the plant and sell it for
scrap? Youre fooling a lot of people.
Senate Energy Committee Chairman Sergio Serge Osmea III took energy
officials to task for failing to promptly use the state-owned Malaya thermal power
plant in Rizal to help bring down the price of electricity.
At the resumption of the Senate hearing into the power rate hike of Manila
Electric Company (Meralco) on Thursday, January 23, Osmea said the
governments decision to keep the old plant without using it during times of
emergency was a conflict of policy.
He said one such emergency was the power shortage last November to
December that led to the rate hike. The scheduled shutdown of the Malampaya
gas field and unscheduled shutdowns of other power plants forced power
distributor Meralco to buy expensive power from the Wholesale Electricity Spot
Market (WESM). (READ:INFOGRAPHIC: How WESM affects your electricity bill)
By his calculations, Osmea said that using the Malaya plant could have
significantly brought down prices in WESM by at least P20. As a result, the
burden passed on to consumers would have been lower.
Officials of the state-run Power Sector Assets and Liabilities Management
Corporation (PSALM) explained that they did not dispatch power from Malaya to
avoid incurring additional losses. These losses would have been passed on to
consumers through the universal charge. Malaya is under PSALM.
Osmea told them, Thats totally irrelevant. You kept the plant in case of
emergency. An emergency occurred but you did not want to use the plant
because you dont want to add charges. It doesnt make sense to me.

Senator Francis Escudero echoed Osmea. So anong purpose, silbi ho sa atin

ng Malaya? Wala sa ngayon kasi ayaw ninyong malugi. (So what is Malayas
purpose for us? None because you dont want to incur losses.)
This is not the first time energy officials were under fire for failing to tap Malaya to
reduce the rate hike. The issue was also raised during the Supreme Court oral
arguments and the House of Representatives probe into the hike earlier this
week.
In the Senate hearing, PSALM department manager Abelardo Sapalaran
admitted that they bid in WESM even if Malaya is unable to supply power only to
comply with the must-offer rule in the spot market.
Sapalaran clarified that Malaya was not on maintenance shutdown but was on
economic shutdown because of the companys financial woes.
This prompted Escudero to ask about the purpose of Malaya, So irrelevant,
balewala? (So its irrelevant, useless?)
Energy Secretary Jericho Petilla admitted as much. I saw that Malaya is really a
headache. Theyre perennially offering [in WESM] but they are not considered
because [the players] know they wont be dispatched.
Petilla said he is studying issuing a circular considering Malaya as a must-run
unit.
Osmea said he was not happy with the answers of the agencies on Malaya.
The administration has to make up its mind. Is Malaya going to be used as a
security plant or not? If not, close it down. You cannot say it will bid in WESM and
then they wont run it. It will affect the other peoples bids, Osmea said in an
interview after the hearing.

The Senate is investigating the P4.15 per kilowatt-hour (kWh) rate hike of
Meralco, the biggest power rate hike in recent history. Meralco was set to
implement the increase in 3 tranches starting December but the Supreme Court
issued a temporary restraining order (TRO). (READ: 13 things Meralco
consumers should know about the hike)

Meralco vs PSALM, finger-pointing

Osmea also castigated the PSALM, Department of Energy (DOE), Energy
Regulatory Commission (ERC), and National Grid Corporation of the Philippines
(NGCP) for disclaiming responsibility on Malaya.
PSALM President Emmanuel Ledesma said Malaya only ran from December 2 to
10 because NGCP never informed PSALM that there was a shortage.
In turn, NGCP officials said they issued only one alert because data from WESM
showed there was no shortage last November.
Osmea said, You made a mistake because the market reflected there was a
shortage. That was the job of NGCP to issue warnings in advance that we will
have a tight situation on such a day, yet you issued only one alert on November
15.
Meralco and PSALM also blamed each other for contributing to the rate hike.
Meralco general counsel Ray Espinosa said, Why is Malaya not synchronized
with the grid? It distorts the behavior of market participants. We need to address
that.
PSALMs Ledesma shot back, pointing to Meralcos instruction to power
generator Therma Mobile to bid 100 megawatts at the WESM ceiling price of P62
per kWh. Meralco drew criticism in the House hearing over this move.

Why did Meralco bid P62 when there was supply? In our hearing in Congress, I
remember that was discussed. How come now, I am hearing different things?

What happens when SC decides?

Senators though were more concerned about how the government agencies and
power companies will respond to the Supreme Courts decision on the power rate
hike.
Escudero and Senators Antonio Trillanes IV, Cynthia Villar and Pia Cayetano
asked about reports of possible blackouts in summer as a result of the TRO.
Petilla said the matter was a commercial problem that Meralco and power
generators can negotiate on. I dont want to say bite the bullet but probably they
can agree about it. Its only two months.
In case Meralco will have to impose the rate hike on consumers, Escudero
suggested that the power distributor stagger the charges for a longer period of
time to lighten the burden on consumers. Meralco was open to the suggestion.
Osmea said the Senate cannot wrap up its investigation because the ERC has
yet to submit its report on allegations of collusion in the rate hike.
The ERC missed its December 30 and January 15 commitments to submit the
results.
ERC Chairperson Zenaida Ducut could not respond to Osmeas question on
when it can finish the report. The House also criticized Ducut for the delay.
Osmea asked, Are you hiding something?
Ducut responded, Were just asking for more time.

Osmea said, How much more time? Unless youre waiting for info from the US
or Antarctica, Im sure you can give me a definite date. For goodness sake.
Ducut said, We will commit to a period of 3 months.
Osmea exclaimed, Three months? The next problem is coming in the April
[summer months]. You keep on moving it back. ASAP is not good enough. Give
me a date. Rappler.com

Related stories:
Petilla endorses Malampaya subsidy bill
Petilla: Tight suply till 2016 but no power failure

WHO IS TO BLAME FOR MERALCOS RATE INCREASE?

By Ducky Paredes on February 11, 2014
THERE will be rotating brown-outs in a few months -- the kind that we had during the Cory years.
Meralco and the Philippine Independent Power Producers Association (PIPPA) have been hinting at this in the event
that the Supreme Court completely stops Meralco from collecting the pass-through generation charges of
independent power producers (IPPs), estimated at P18 billion.
And, even Secretary Jericho Petilla of the Department of Energy (DOE) admits that there could really be power
disruptions this summer because we have precariously thin reserves -- total demand for Luzon is expected to hit
10,300 MW as against an available combined supply of 10,500 MW. Thus, any unscheduled shutdown or tripping of
even just one IPP in the Luzon Grid would likely force DOE to order power rationing for Metro Manila customers.
When the specter of rotating blackouts first surfaced some weeks back, Petilla was quick to dismiss it citing the
assurance of stable supply in the years ahead, claiming that the various committed power projects meant to augment
supply were on track.
But this turns out to be no more than wishful thinking, since only two committed projects are actually ongoing, and
these are the 135-MW and 300-MW coal-fired plants of the Southern Luzon Thermal Energy Corp. (a joint venture of
Trans-Asia and Ayala Corp.) and the Southwest Luzon Power Generation Corp. (of the Consunji Group).

The other projects mentioned by Petilla may not take off at all.
Petilla was candid enough to admit this blackout scenario in revealing that the tight supply situation would puts the
Luzon Grid on yellow alert this summer, which means there will be rotating power interruptions once a major power
plant bogs down.
Kapag may plantang biglang bumagsak ay talagang hindi natin inaasahan yan. Parang kotse yan, tumatakbo, hindi
natin alam kung kailan titirik, said Petilla.
And to boost supply, Petilla said the DOE has decided to run the state-owned Malaya Thermal Plant in April the
very same idled government facility that senators blamed for last months upsurge in electricity prices at the
Wholesale Electricity Spot Market (WESM) during the November-December weeks when the Malampaya gas facility
and several IPPs were on simultaneous shutdowns.
PSALMs Ledesma subsequently admitted during the same hearing, that the Malaya plant was not activated because
it would have cost this cash-strapped government firm as much as P1.35 billion in operational losses were it to run
this facility for a month to augment the supply available at WESM.
The Senate energy committee chairman, Sergio Osmea III, suggested that on the basis of such official reasoning,
PSALM might as well burn or bomb the Malaya plant and sell it for scrap iron.
***
All these things point to the likelihood of summer blackouts and the unconscionable idling of the governments Malaya
facility bring us to this point: What convinced Communications Secretary Herminio Coloma to go on combat mode
and attack the power industry players by announcing that electricity consumers should not be made to pay for the
unjustified rate hike.
Coloma claimed it was the belief of President Aquino that the Electric Power Industry Reform Act (EPIRA) provision
on possible disgorgement of profits must be enforced on industry players once the DOE and Department of Justice
(DOJ) find proof of collusion among them, and that the rate increase was unjustified because it was triggered by a
foreseeable event for which these same players could have prepared.
Clearly, Coloma was blaming the private sector for a mess that was mostly the governments own makinga botched
job that is likely to get worse in the months and years ahead before it gets any better.
It was the DOEs role to make sure that power plant maintenance shutdowns coinciding with the Malampaya gas
shutdown were rescheduled to avoid a wide supply gap that would drive up electricity prices.
Indeed, during the hearings at the Senate and at the House of Representatives as well, Secretary Petilla declared
that he had called for several meetings to address the situation. In both congressional probes, Petilla even asserted
that he had instructed officials of the Malaya plant to make necessary preparations to run it for 15 days, but, curiously
he stopped short of explaining why Malaya had not been used during the shutdown period.
What Colomas finger-pointing suggests is that he is merely covering up the failure of the DOE by blaming industry
players for Decembers steep rate hike.

It became very clear during the congressional hearings that had the Malaya thermal plant, which has an available
capacity of 610 MW, been operated, the spike in the WESM prices would have been completely avoided.
In fact, a Meralco study presented during the Senate hearing bared that had Malaya been dispatched during the Nov.
11-Dec. 10 shutdown period, WESM prices would have fallen by as much as 70% from P21/kWh to just P5.
It has also become very clear, based on admissions by PSALMs Ledesma that Malaya was in flagrant violation of the
WESM must-offer ruleand these violations were tolerated by the Philippine Electricity Market Corp. (PEMC), which
operates WESM.
Remember that the Malaya thermal plant is a government- owned and -controlled power plant under PSALM, of
which Petilla is vice chairman. Petilla also chairs PEMC.
So if Petilla was doing his job during the shutdown period, he could have avertedas it was his duty to do sothe
unusual spike in WESM prices.
Yet Petilla did nothing. He has not even taken the PSALM management to task for violating WESM rules in idling the
facility and for not complying with his instructions to operate and dispatch Malaya.
As the market operator of WESM, the Petilla-chaired PEMC actually had the first opportunity to notice and address
the unusually high prices obtaining at WESM. Yet it did not act.
In fact, PEMCI even cleared an offer price of P62 just to satisfy a measly 0.5 MW demand. Why?
All told, Secretary Petilla could have made a big difference in ensuring lower WESM prices. But he failed big-time.
***
But, where is Coloma coming from? Does he think that part of his job as Palace communications secretary is to cover
for the failings of his Cabinet peers?
The Supreme Court reacted to Colomas blaming the judiciary for the unbridled rice smuggling when he called for
closer coordination or teamwork among all agencies involved; he also asked the courts to act faster on pending
smuggling cases to complement the Administrations drive against smugglers.
SC spokesman Theodore Te wrote: I am sure Secretary Coloma knows the judiciary cannot act on cases that are not
brought before it and convictions cannot be secured unless the burden of proof imposed by the Constitution is
discharged by the (DOJ), which falls under the executive and not the judicial department.
Te said the zero conviction rates in the 157 rice smuggling cases over the past three years has to do not only with
how fast the courts resolve cases but also with the quality of the evidence that prosecutors presented in support of
their cases.
Te also said that that the secretary should know that, The courts are not expected to have closer coordination or
teamwork with the prosecutorial arm as, on the contrary, they are expected to be independent and, on many
occasions, play the spoilers role.
***

Readers who missed a column can access www.duckyparedes.com/blogs. This is updated daily. Your reactions are
welcome at duckyparedes@yahoo.com or you can send me a message through Twitter @diretsahan.
Category:
Column Of The Day
- See more at: http://www.malaya.com.ph/business-news/opinion/who-blame-meralco%E2%80%99s-rateincrease#sthash.eTgvl1As.dpuf

Friday, January 24. 2014

DOE chief asked to terminate 600mw Malaya power plant

Written by Jelly F. Musico

Posted online by Jigs Nepomuceno in National News at 00:00
MANILA The Power Sector Assets and Liabilities Management Corp (PSALM) has
asked Department Energy (DOE) Secretary Carlos Jericho Petilla to terminate the
operation of the government-owned 600-megawatt Malaya thermal power plant.

Actually, when I came in I saw this Malaya is creating headache because they are
offering but would not really dispatch and they (PSALM) requested as early as
middle of last year to retire them, Petilla told the Senate inquiry on power rate hike
and bills reviewing EPIRA (Electric Power Industry Reform Act) of 2001.
They really want to get rid of this plant because this plant is cheaper to be burned
than to actually operate in a sense, the DOF chief added.
During the hearing, the senators learned that Malaya complied with a must offer
rule when it bidded at P45 but actually did not dispatch power specially when
Malampaya went on 30-day maintenance shutdown late last year.
You participated in the bidding but you did not dispatch because youre not
synchronized with the national grid. So you're fooling a lot of people, youre fooling
me and youre fooling secretary, Sen. Sergio Osmena III, chair of the Senate
committee on energy, told the PSALM officials.

PSALM department manager Abelardo Sapalaran explained that Malaya plant has
been complying with must offer rule of the Wholesale Electricity Spot Market
(WESM) but without dispatching power for the last two years.
Actually, were losing since 2006 and we were penalized already. The purpose of
submitting bid offer is to comply with WESM rules must-offer, Sapalaran said.
Rey Espinosa, legal counsel of MERALCO, admitted that they offered at P62 but due
to Malayas failure to dispatch, the price hit at P62 per kilowatt hour.
If only Malaya dispatched when it offered P45, the price could not have hit P62
because we bid at P62 so that it will not be dispatched, Espinosa explained.
Sapalaran told the Senate panel that it takes 14 to 16 hours to open the Malaya
plant and synchronize it with NGCP.
PSALM president Emmanuel Ledesma said they did not run Malaya when
Malampaya and other power plants went to maintenance shutdown because there
was sufficient supply.
So why did we not run Malaya, personally in my understanding, is the supply
sufficient, I concluded that because NGCP (National Grid Corporation of the
Philippines) never mentioned anything to us that there was insufficient supply,
Ledesma said.
Osmena, however, believed that non-operation of Malaya has led to the increase of
prices of power.
If only Malaya dispatched at least 300mw, the prices in the WESM could have been
gone down from P62 to P12, Osmena said in media interview after the five-hour
hearing.
Osmena said the problem is PSALM tries to save money because they admitted
that running Malaya will incur for PSALM a loss of P2.2 billion a year.
I think they have to make their mind if Malaya is going to be used as security plan
or not because if not, then close it down, Osmena said.
Senator Cynthia Villar said she was surprised to learn that Malaya plant cannot be
used in times of emergency.
I was so surprise that there was a chance for them to help and they did not sell
their power, Villar said.
Senator Francis Chiz Escudero questioned the PSALMs action to comply with
WESMs must offer rule without dispatching power even in time of emergency.

So whats the purpose? Why did you offer bid and would not dispatch power?
Thats irrelevant, Escudero said.
Petilla said time has not yet come for the 600mw Malaya to be shut down despite
claim by PSALM that it is no longer earning money.
That time is not now, so do not mothball that plant at this time. Im quite sure that
there is a balance that we can do right now, Petilla said. (PNA)
CTB/JFM
- See more at: http://www.zambotimes.com/archives/news/84316-DOE-chief-askedto-terminate-600mw-Malaya-power-plant.html#sthash.NuRuxwjj.dpuf

WHO IS TO BLAME FOR MERALCOS RATE INCREASE?

By Ducky Paredes on February 11, 2014
THERE will be rotating brown-outs in a few months -- the kind that we had during the Cory years.
Meralco and the Philippine Independent Power Producers Association (PIPPA) have been hinting at this in the event
that the Supreme Court completely stops Meralco from collecting the pass-through generation charges of
independent power producers (IPPs), estimated at P18 billion.
And, even Secretary Jericho Petilla of the Department of Energy (DOE) admits that there could really be power
disruptions this summer because we have precariously thin reserves -- total demand for Luzon is expected to hit
10,300 MW as against an available combined supply of 10,500 MW. Thus, any unscheduled shutdown or tripping of
even just one IPP in the Luzon Grid would likely force DOE to order power rationing for Metro Manila customers.
When the specter of rotating blackouts first surfaced some weeks back, Petilla was quick to dismiss it citing the
assurance of stable supply in the years ahead, claiming that the various committed power projects meant to augment
supply were on track.
But this turns out to be no more than wishful thinking, since only two committed projects are actually ongoing, and
these are the 135-MW and 300-MW coal-fired plants of the Southern Luzon Thermal Energy Corp. (a joint venture of
Trans-Asia and Ayala Corp.) and the Southwest Luzon Power Generation Corp. (of the Consunji Group).
The other projects mentioned by Petilla may not take off at all.
Petilla was candid enough to admit this blackout scenario in revealing that the tight supply situation would puts the
Luzon Grid on yellow alert this summer, which means there will be rotating power interruptions once a major power
plant bogs down.
Kapag may plantang biglang bumagsak ay talagang hindi natin inaasahan yan. Parang kotse yan, tumatakbo, hindi
natin alam kung kailan titirik, said Petilla.
And to boost supply, Petilla said the DOE has decided to run the state-owned Malaya Thermal Plant in April the
very same idled government facility that senators blamed for last months upsurge in electricity prices at the

Wholesale Electricity Spot Market (WESM) during the November-December weeks when the Malampaya gas facility
and several IPPs were on simultaneous shutdowns.
PSALMs Ledesma subsequently admitted during the same hearing, that the Malaya plant was not activated because
it would have cost this cash-strapped government firm as much as P1.35 billion in operational losses were it to run
this facility for a month to augment the supply available at WESM.
The Senate energy committee chairman, Sergio Osmea III, suggested that on the basis of such official reasoning,
PSALM might as well burn or bomb the Malaya plant and sell it for scrap iron.
***
All these things point to the likelihood of summer blackouts and the unconscionable idling of the governments Malaya
facility bring us to this point: What convinced Communications Secretary Herminio Coloma to go on combat mode
and attack the power industry players by announcing that electricity consumers should not be made to pay for the
unjustified rate hike.
Coloma claimed it was the belief of President Aquino that the Electric Power Industry Reform Act (EPIRA) provision
on possible disgorgement of profits must be enforced on industry players once the DOE and Department of Justice
(DOJ) find proof of collusion among them, and that the rate increase was unjustified because it was triggered by a
foreseeable event for which these same players could have prepared.
Clearly, Coloma was blaming the private sector for a mess that was mostly the governments own makinga botched
job that is likely to get worse in the months and years ahead before it gets any better.
It was the DOEs role to make sure that power plant maintenance shutdowns coinciding with the Malampaya gas
shutdown were rescheduled to avoid a wide supply gap that would drive up electricity prices.
Indeed, during the hearings at the Senate and at the House of Representatives as well, Secretary Petilla declared
that he had called for several meetings to address the situation. In both congressional probes, Petilla even asserted
that he had instructed officials of the Malaya plant to make necessary preparations to run it for 15 days, but, curiously
he stopped short of explaining why Malaya had not been used during the shutdown period.
What Colomas finger-pointing suggests is that he is merely covering up the failure of the DOE by blaming industry
players for Decembers steep rate hike.
It became very clear during the congressional hearings that had the Malaya thermal plant, which has an available
capacity of 610 MW, been operated, the spike in the WESM prices would have been completely avoided.
In fact, a Meralco study presented during the Senate hearing bared that had Malaya been dispatched during the Nov.
11-Dec. 10 shutdown period, WESM prices would have fallen by as much as 70% from P21/kWh to just P5.
It has also become very clear, based on admissions by PSALMs Ledesma that Malaya was in flagrant violation of the
WESM must-offer ruleand these violations were tolerated by the Philippine Electricity Market Corp. (PEMC), which
operates WESM.
Remember that the Malaya thermal plant is a government- owned and -controlled power plant under PSALM, of
which Petilla is vice chairman. Petilla also chairs PEMC.

So if Petilla was doing his job during the shutdown period, he could have avertedas it was his duty to do sothe
unusual spike in WESM prices.
Yet Petilla did nothing. He has not even taken the PSALM management to task for violating WESM rules in idling the
facility and for not complying with his instructions to operate and dispatch Malaya.
As the market operator of WESM, the Petilla-chaired PEMC actually had the first opportunity to notice and address
the unusually high prices obtaining at WESM. Yet it did not act.
In fact, PEMCI even cleared an offer price of P62 just to satisfy a measly 0.5 MW demand. Why?
All told, Secretary Petilla could have made a big difference in ensuring lower WESM prices. But he failed big-time.
***
But, where is Coloma coming from? Does he think that part of his job as Palace communications secretary is to cover
for the failings of his Cabinet peers?
The Supreme Court reacted to Colomas blaming the judiciary for the unbridled rice smuggling when he called for
closer coordination or teamwork among all agencies involved; he also asked the courts to act faster on pending
smuggling cases to complement the Administrations drive against smugglers.
SC spokesman Theodore Te wrote: I am sure Secretary Coloma knows the judiciary cannot act on cases that are not
brought before it and convictions cannot be secured unless the burden of proof imposed by the Constitution is
discharged by the (DOJ), which falls under the executive and not the judicial department.
Te said the zero conviction rates in the 157 rice smuggling cases over the past three years has to do not only with
how fast the courts resolve cases but also with the quality of the evidence that prosecutors presented in support of
their cases.
Te also said that that the secretary should know that, The courts are not expected to have closer coordination or
teamwork with the prosecutorial arm as, on the contrary, they are expected to be independent and, on many
occasions, play the spoilers role.
***
Readers who missed a column can access www.duckyparedes.com/blogs. This is updated daily. Your reactions are
welcome at duckyparedes@yahoo.com or you can send me a message through Twitter @diretsahan.
Category:
Column Of The Day
- See more at: http://www.malaya.com.ph/business-news/opinion/who-blame-meralco%E2%80%99s-rateincrease#sthash.eTgvl1As.dpuf

PSALM: Malaya plant

can't always run when
needed
PSALM says the plant has slow start-up time and low fuel replenishment rate
Rappler.com
Published 6:58 PM, Feb 12, 2014
Updated 7:00 PM, Feb 12, 2014

NO DISPATCH? PSALM reportedly avoided as much as P1 billion in losses by keeping the Malaya
plant offline during the Malampaya shutdown. File Photo from AFP.

MANILA, Philippines The Power Sector Assets and Liabilities Management

Corporation (PSALM) said Wednesday, February 12 that it should not be blamed
for not dispatching the Malaya thermal power plants energy load when people
needed it last year.
Emmanuel Ledesma, president of PSALM, said the power plants slow start-up
time and its low fuel replenishment rate were to blame for their non-compliance to
the must-offer rule of the Wholesale Electricity Spot Market (WESM).
Ledesma added, "the technical limitations of Malaya make it a sheer impossibility
for Malaya to be always traded through the WESM bidding process."

He explained further that, if the Malaya plant traded its power at the WESM at its
full, 650-megawatt (MW) capacity for 28 days, it would take 3 months of nonoperation to run again.
The power plant recently earned an exemption from WESM's must-offer rule and
instead became a must-run unit.
A must-run unit must provide needed power supply on real-time basis or on a
particular schedule deemed necessary by WESM system operator National Grid
Corporation of the Philippines (NGCP) to ensure reliability of power supply in the
grid, especially when there's a shortfall.
The must-offer rule requires all generation companies registered in WESM to
declare and offer their maximum generating capacities to prevent capacity
withholding.
Energy Secretary Carlos Jericho Petilla said PSALMs decision not to dispatch
Malayas energy load despite bidding in the WESM constituted a violation of
WESM rules.
Petilla said Malaya was on an open breaker" status, meaning the plant actually
made an offer but didnt dispatch energy when asked.
Ledesma countered, saying PSALMs open breaker status has since started in
August 2012, clarifiying that the illegality of this has yet to be established in
accordance with due process in the proper forum.
PSALM explained to the Philippine Electricity Market Corporation (PEMC) Market
Surveillance Committee in June 2013 the technical and financial reasons behind
its decision to not trade Malaya in the WESM, in response to the PEMC MSCs
May 2013 letter. PEMC is the spot market operator.

In the letter, PEMC asked PSALM to clarify Malayas status as an open breaker
plant when not run by the NGCP as a must-run unit. Ledesma said the PEMC
has, to date, not yet responded to PSALMs letter.
Prior to the letter, PSALM emphasized that the Energy Regulatory Commission
(ERC) rather than the PEMC has the original and exclusive jurisdiction over all
cases regarding disputes between or among members of the energy sector.
The ERC also holds jurisdiction over contesting fees, fines, penalties, and rates.
Ledesma added that PSALM has brought this jurisdictional issue to the Supreme
Court in relation to a different case."
The ERC has requested an explanation from PSALM regarding the open
breaker status issue in January. Rappler.com

PSALM approves rehab

of Malaya plant
The rehabilitation of the Malaya Unit 1 will help plug the anticipated power supply
deficiency next year
Rappler.com
Published 8:43 AM, Aug 20, 2014
Updated 8:43 AM, Aug 20, 2014

IN AID OF POWER SUPPLY. The rehabilitation of the Malaya Unit 1 will help plug the supply
deficiency that is anticipated next year. File photo by Agence France-Presse

MANILA, Philippines The Power Sector Assets and Liabilities Management

Corporation (PSALM) board has approved the rehabilitation of Unit 1 of the
Malaya Thermal Power Plant in Rizal, the state firms president said.
The board has approved the overhauling of Malaya 1. Procurement for the
service will be handled by the Bids and Awards Committee (BAC), said PSALM
President Emmanuel Ledesma Jr. in a text message Tuesday, August 19.
The bid schedule has yet to be finalized but industry stakeholders are calling for
the speedy rehab of the power facility before the Luzon grid runs out of power
supply in the summer months of 2015.
The Manila Electric Company (Meralco), for one, strongly urged PSALM to fasttrack the rehabilitation of Unit 1 so that the entire Malaya facility can run at its full
capacity of 650 megawatts (MW).
PSALM and the Department of Energy (DOE) also want the rehabilitation done
before March next year.
DOE Secretary Carlos Jericho Petilla, who sits as vice chairman of the PSALM
board, said the board has been continuously meeting on how to fast-track the
rehab work.
Technically, the DOE is only one seat in the board. Any decision will have to
involve the board, he said in a separate text message.
The PSALM board is headed by finance secretary Cesar Purisima.

In aid of power supply

The power facility consists of a 300-MW unit with a once-through type boiler and
a 350-MW unit fitted with a conventional boiler. It was rehabilitated in 1995 by the
Korea Electric Power Corporation (KEPCo) under a 15-year rehabilitate-operatemanage-maintain agreement.

According to Petilla, KEPCo has informed the agency that Unit 1 of Malaya needs
to be overhauled. KEPCO is among those interested to undertake the rehab,
Petilla said.
The DOE and PSALM said the rehabilitation of the Malaya Unit 1 would help plug
the supply deficiency that is anticipated next year. (READ: Power emergency:
What it means)
Ideally, Ledesma had said, the rehab of the Malaya Unit 1 should be finished
before the scheduled shutdown of the Malampaya natural gas pipeline next year.
The Malampaya facility will go offline from March 15 to April 14, 2015 to
commence Phase 3 of the installation of a platform aimed at maintaining fuel
supply to power plants providing half of Luzons power needs.
The shutdown of the Malampaya facility, which, according to consortium
members could no longer be rescheduled, worries the DOE and PSALM because
the capacity of Malaya is crucial to the power requirements of Luzon.
Based on DOE projections, there will be a deficit of 200 MW next year. Energy
supply will be thin by March to May 2015, the months with the highest electricity
demand for the year. To address this, Petilla said an additional 400 MW-500 MW
capacity would be needed to act as buffer supply during the peak months.
(READ: Solving the energy crisis by empowering the people) Rappler.com
For power crisis stories, read here.
For related state of emergency for power crisis stories, read here.
Carousel image from Wikipedia

Power consumers to carry burden of

P62B in settlement claims vs. PSALM?

By DANESSA O. RIVERA, GMA NewsAugust 26, 2014 7:36pm

More from: http://www.gmanetwork.com/news/story/376495/economy/companies/power-consumers-to-carry-burdenof-p62b-in-settlement-claims-vs-psalm

Consumers may have to carry the burden of over P60 billion in settlement claims by disgruntled
former employees of the Power Sector Assets and Liabilities Management Corporation (PSALM) to
avoid aggravating the looming power crisis in 2015, the Energy secretary said.
Apart from having its assets garnished, a possible option is for PSALM to get at loan to cover the settlement claims
so as not to hamper its operations, Energy Secretary Carlos Jericho Petilla told reporters on the sidelines of the
Management Association of the Philippines (MAP) General Membership Meeting in Makati City Tuesday.
"DOE's biggest concern is still power. The DAMA's case, whatever liability NPC has, is part of the NPC debt," he said.
"The P62 billion, kung makakautang s'ya para hindi maapektuhan ang operation, i-cha-charge sa tao. How much, I
don't know," he said.
Over the weekend, PSALM said it received a court order from the Regional Trial Court (RTC)-Quezon City (QC)
garnishing its funds worth over P60 billion.
The RTC QC ordered PSALM to immediately pay P60.24 billion to over 8,000 beneficiaries of Napocor-Drivers and
Mechanics Association (DAMA) and P1.81 billion for "lawful fees and costs for the execution of the Supreme Court's
Resolution."
The Napocor-DAMA were employees terminated by PSALM when it was restructured in 2003 pursuant to the Electric
Power Industry Reform Act (EPIRA).
Notice of garnishment
The notice of garnishment are legally baseless and violate due process, PSALM president and CEO Emmanuel R.
Ledesma said in a statement posted on its website Monday.
"If our funds are garnished, our long-term debts would become immediately due and demandable... This will result in
operating cash deficit, which will lead to power shortage nationwide," he noted.
PSALM is responsible for the fuel supply and operations budget of state-owned power plants, namely the Malaya
Thermal Power Plant in Luzon, Power Barges (PBs) 101 and 102 and Naga Coal-fired Thermal Power Plant in
Visayas, and PB 104 in Mindanao. These facilities produce a combined total of 430 megawatts (MW) dependable
capacity.
PSALM also provides for the fuel requirements of Independent Power Producer (IPP) plants, namely the Ilijan Natural
Gas Power Plant in Luzon, the Zamboanga Diesel Power Plant and the General Santos Diesel Power Plant in
Mindanao.
The agency also collects and administers the Universal Charge for Missionary Electrification, which is the source of
funds of the National Power Corporation (NPC) off-grid operations.
There's still hope as the PSALM board filed a motion for reconsideration before the Supreme Court last Friday, Petilla
said.
"[We'll have to] wait for SC... At the expense na puwede kami ma-contempt. Kapag sumangayon kami, baka tumigil
ang planta," he said.
"Pero ang nakikita ko lang dito na way out [ay] dagdagan ang utang. Kung hindi magbabago si SC or i-re-reconsider
ng SC na baka mas mababa sa P62 billion, dahil malaking pabigat 'yun sa PSALM," he noted.
Petilla said the biggest threat to the power situation is coming from the people who will garnish PSALM's funds.

"The interest of the public, I think, is more than the interest of employees. I respect that they also have the rights but,
in this country, there's no absolute right. It's always what is good for the general public," he said.
Presidential powers
During the MAP forum, Petilla reiterated the need to invoke the Section 71 of EPIRA that gives the President the
power to address the shortage by contracting new power plants or renting modular generators.
Last July 21, Energy Secretary Jericho Petilla said he recommended that the President declare a state of national
emergency on power to avoid rotating brownouts in Luzon due to a power supply shortage of between 300 to 500
megawatts (MW) starting next year.
With seven months remaining before the summer of 2015, the government still has time to contract new power to
avert an energy crisis.
"I will take the cue of the President and those that want this or who don't want this," he said.
Business groups urged the government not to amend the EPIRA but to implement it properly and focus instead on
implementing the law properly.
MAP recently said government should aggressively push the demand side to undertake energy efficiency measures,
urgently implement a voluntary Interruptible Load Program and lift the secondary price cap in the Wholesale
Electricity Spot Market. VS, GMA News

More from: http://www.gmanetwork.com/news/story/376495/economy/companies/power-consumers-to-carry-burdenof-p62b-in-settlement-claims-vs-psalm .