THE Independent Electricity Market Operator of the Philippines (IEMOP) had imposed the secondary price cap last week but clarified that the spike in spot market prices had nothing to do with the shutdown of the Malampaya gas facility starting Saturday.
According to IEMOP Chief Operating Officer Robinson Descanzo, the P6.245 per kilowatt hour (kWh) secondary price cap was imposed at 4:25am of September 30 and was lifted at 12:40pm of October 1. The preventive scheduled period of the Malampaya gas facility started October 2.
The cap is a price-mitigating mechanism imposed when there are persistent high market prices. Since the secondary price cap was triggered, this meant that the Wholesale Electricity Spot Market (WESM) prices averaged P9/kWh or higher for at least three days.
IEMOP is the operator of WESM, the country’s trading floor for electricity.
The triggering of the secondary price cap happened even before the shutdown of Malampaya. Descanzo recalled that Dinginin plant was suddenly out last September 28, but resumed September 30. Thereafter, WESM prices started to drop until the cap was lifted sometime noon of October 1. Since then until Sunday, when the shutdown of Malampaya commenced, the price cap was no longer triggered.
“The gas maintenance work started already but we have sufficient supply today. This is why demand is also low. There was no price cap today,” Descanzo said in an interview Saturday.
The IEMOP official earlier said that there would be a supply margin of 4,000MW during the shutdown, as most of the gas-fired power plants fueled by Malampaya would be able to run on liquid fuel. Moreover, the coal plants that were on shutdown before have now resumed operations.
With the Malampaya gas facility shutdown, the 1,200MW Ilijan plant and the 440MW San Gabriel plant of First Gen Corp. also went on shutdown, the Manila Electric Company (Meralco) said over the weekend.
However, the Power Supply Agreement (PSA) between Ilijan’s South Premiere Power Corp. and Meralco obligate the former to provide replacement power so it could continue to supply Meralco at contract prices, despite the Malampaya shutdown.
Other First Gas plants—Sta. Rita (1,000MW) and San Lorenzo (500MW), have switched to liquid fuel so that their capacity will continue to be available to the Luzon grid. Santa Rita, San Lorenzo, San Gabriel and Ilijan plants supply almost 60 percent of Meralco’s requirements.
To make sure that Meralco has sufficient power requirements to service its customers, it asked the Department of Energy (DOE) to exempt the 90MW Contract for the Supply of Electric Energy (CSEE) it entered into with the Power Sector Assets and Liabilities Management Corp. (PSALM) from the conduct of Competitive Selection Process (CSP).
The DOE granted Meralco’s request. Meralco subsequently wrote the Energy Regulatory Commission (ERC) about the immediate implementation of the CSEE, which is valid until July 2022.
Meralco utility economics head Lawrence Fernandez said the immediate implementation of the CSEE with PSALM is meant to reduce exposure of Meralco to high WESM prices.
The utility firm also asked for the same exemption from the DOE on the emergency power supply agreements with Masinloc Power Partners Co. Ltd. (MPPCL) for the procurement of 120MW and with Panay Electric Development Corp. (PEDC) for 50MW.
“We have not received a response from the DOE on the emergency PSAs with MPPCL and PEDC,” said Fernandez.
Meralco First Vice President and Head Regulatory Management Office Jose Ronald Valles said the PSAs are intended to cover peaking requirements from October 2021 through the election period, until July 2022.
“In light of the increased frequency and persistence of Malampaya gas restrictions, the October 2-22 Malampaya shutdown, anticipated shrinking electricity operating reserve margins leading up to the May 2022 elections, especially with upcoming simultaneous scheduled maintenance and possible forced outages of power plants—all of which only become visible in recent months—Meralco requested Certificates of Exemption from CSP from the DOE. Meralco eagerly awaits DOE decision on this request,” he said.
‘Enough power on first day of Malampaya shutdown’
Source: News Paper Radio
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