Gov’t’s Malaya plant failed its purpose – senators
MANILA, Philippines – To keep itself from losing money, the 600-megawatt Malaya thermal power plant avoided participating in the energy spot market despite supply shortages during the Malampaya maintenance shutdown.
Senators on Thursday discovered that the government-owned Malaya, which could have solved the power supply problem and the resulting price spikes during the shutdown, failed its purpose.
“To provide much needed capacity in Luzon…Yun po ang purpose ng Malaya. But that was not the purpose served under the circumstances,” Senator Francis “Chiz” Escudero said during a Senate hearing on the Manila Electric Co.’s (Meralco) power rate hike.
Meralco last year implemented a staggered P4.15-per kilowatt hour hike, saying its generation costs increased due to the supply shortage following the Malampaya natural gas plant shutdown. The Supreme Court later ordered a halt in the increase pending discussion of several petitions.
“In order to avoid Malaya to run but keep on losing, we offered bids but we did not synchronize the plant with the bid,” Abelarbo Sapalaran, Power Sector Assets and Liabilities Management Corp. (PSALM) Electricity Trading Department manager, said during the hearing.
Sapalaran also revealed that their offer at the energy spot market was at P45 per kilowatt hour, which Escudero pointed out was a huge amount compared to the Wholesale Electricity Spot Market’s (Wesm) average price at P6 per kwh during non-peak hours.
“That doesn’t make sense to me,” Senator Sergio Osmeña III said, pointing out that it would have been better to burn a power plant that is too costly to operate.
“What is the use of Malaya (a government-owned power plant) to us (the people)?” Escudero asked.
It was later revealed that unlike other power plants that can run after 15 minutes starting up, Malaya needs several hours to heat up.
In addition to that, while it can run continuously for 60 to 70 days, it will take 5 months or so to replenish its fuel because of the plant’s several limitations.
But Energy Secretary Carlos Jericho Petilla said they are trying to find a solution on how to deal with the Malaya plant. He said selling it as scrap and not running it would affect the country’s energy supply.
“I’m quite sure there is a balance we can do right now,” he said.
As of the moment, Petilla said the National Grid Corporation of the Philippines (NGCP) is using Malaya thermal plant as a security or emergency asset rather than to “taper” or affect the prices in the market.
During the joint hearing of the Senate committee on energy and the committee on trade, commerce and entrepreneurship, Osmeña accused the NGCP of failing to identify the energy supply shortage and dispatch in time additional power plants.
NGCP representatives insisted that there was no supply shortage from November 8 to December 10, during the Malampaya shutdown.
But the Senate energy committee chairperson pointed out that the market prices reflected the supply and demand situation.
“Obviously the market merely reacted to the actual shortage (with the rising of power prices)…[could it] have been avoided if other plants have been called to operate?” he asked NGCP.
For not being able to do anything to address the price hikes, the Senators repeatedly berated the Regulatory Commission (ERC).
Senator Antonio Trillanes IV called the commission a “rubber stamp” for allegedly approving rate hike proposals without thorough discussion and scrutiny.
“We are not a rubber stamp,” ERC chairperson Zenaida Cruz-Ducut replied.
The senator added that if it was up to him, he would terminate or “kick out” members of the ERC and the Power Sector Assets and Liabilities Management Corp. for not doing their job.
“I’m actually surprised that ERC is conducting the investigation on the power rate hike when in my opinion, they’re the biggest culprits here,” he said.
Escudero also called them a “passive body” while committee chairman Osmeña scolded Ducut for not being able to give a timeframe for the conclusion of their investigation on Meralco’s price hike.
Osmeña said he was not happy with the answers of the government entities overseeing the energy sector, pointing out that they are merely pointing fingers and “spitting at each other.”
He said the committee would set another hearing, depending on the Supreme Court’s decision on the TRO.
Addressing Meralco, Trillanes pointed out that usually it’s the private sector that is more efficient but, “In this case, you are not showing any sign of efficiency.”
The senator said he filed a bill to expand the uses of the Malampaya funds, including subsidizing power rate hikes.
Energy Secretary Carlos Jericho Petilla said he would recommend it to President Benigno Aquino III to be certified as urgent.
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