Government failed to use available assets to stop power rate hike

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THE Government has a standby power plant capable of generating 600 megawatts enough to prevent the power rate increase but the Power Sector Assets and Liabilities Management Corp.  (PSALM) decided not to utilize it, lawmakers discovered on Thursday.

During the joint senate committee hearing on the power rate hike issue, Senator Serge Osmena 3rd, questioned energy officials for their failure to utilize the government-owned Malaya thermal power plant in Pililia during the scheduled shutdown of the Malampaya power plant last November to bring down power rates.

According to Osmena, the Malaya plant is capable of providing additional 600 megawatts and by just using half of its capacity or 300 megawatts the government could prevent that power rate spike.

“We ran some simulations and we learned that with just 300 megawatts we could have brought the price down by P20.00 in the spot market. Why the government did not use the Malaya plant to reduce prices?” Osmena, the chair is senate committee on energy, said.


According to Osmena the government could have prevented the supply shortage by using the Malaya plant during the scheduled Malampaya power plant shutdown  from November 11 to December 10 last year.

But based on the information got by Osmena, the Malaya plant was not operational from November 10 to December 1 and was only utilized on December 2 to 10.

He said the failure to use the available power asset of the government is a clear indication that energy officials were not able to figure out obvious warnings that there will be a shortage.

“You can see just by the pricing signals that there is a shortage and should have offered whatever reserve power we have…” Osmena told the energy officials who were present in the hearing.

But Abelarbo Sapalaran, Electricity Trading Department manager of PSALM, informed senate investigators that the Malaya power plant stopped its operation as early as July last year due to loses it has been incurring.

According to him the cost in running the power plant is bigger than income it has been generating that is why they decided to place the plant under economic shutdown.

He however made it clear that PSALM informed the energy department, the National Grip Corporation of the Philippines and the Philippine Electricity Market Corporation (PEMC) that Malaya can always provide additional supply if needed.

But PSALM, he added, only received a request for them to operate the Malaya plant on December 2.

Sapalaran further noted that they even offered bids at the spot market but unfortunately it was at P45 per kilowatt hour, way higher compared to the average price of WESM.

The PSALM official said that the available capacity of the Malaya plant that time was at 560 megawatts.

Osmena on the other hand said that given the situation of the power plant,  he sees no point for the government to maintain it.

Instead of keeping it, Osmena said, the government should burn the plant down and sell the scrap to general money.

Emmanuel Ledesma, PSALM president, meanwhile told the committee that they already tried to bid out the plant but unfortunately nobody wants it.

He also explained that operating the Malaya plant would also incur universal charge which will be passed on to consumers nationwide.

Energy Secretary Carlos Jericho Petilla, for his part said that since nobody is interested with Malaya, the government will just maintain it as must-run unit (MRU) that will be used to provide power during times of shortage.

He added that they don’t want to get rid of the Malaya plant because they still need it in the equation on the country’s power assets. Although running it like a regular power plant it not on their option right now because of high operation costs.

 Don’t underestimate the public

Meanwhile Senator Antonio Trillanes 4th warned the Manila Electric Company (Meralco) not to underestimate the wrath of the public noting that public outcry could result in serious repercussions even  a government takeover.

Trillanes, during the hearing expressed his displeased over Meralco’s practice of passing all additional charges to consumers, who according to him are already suffering from high prices of basic commodities.

The senator insisted that Meralco can do something to reduce power rates and it should be its priority at this time in order to appease the public.

He noted that the power rate increase continues to anger the public and Meralco should not take it lightly because aside from congress, the Supreme Court is also looking on the rate hike issue.

“Do not underestimate the wrath of the people. It could be the reason why the government took over Meralco during the martial law,” Trillanes said.

He added that lawmakers are sensitive to public sentiments and time may come when congress would come up with a bill taking over the power distribution in the country due to public pressure. JEFFERSON ANTIPORDA

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