RSA expects Ilijan power plant to be turned over to SMC unit

BUSINESSMAN Ramon S. Ang said the 1,200-megawatt (MW) Ilijan combined-cycle power plant should be turned over to the power unit of San Miguel Corp. (SMC) after the lapse of the build-operate-transfer (BOT) contract with the government expires in 2020.

“Of course, it should be turned over to us. No question about it,” Ang said.

Based on the contract, the plant will have to be turned over to the designated independent power-producer administrator (Ippa).

SMC subsidiary South Premiere Power Corp. (SPPC) is the Ippa for the Ilijan plant.

This despite an ongoing legal dispute between SMC and the Power Sector Assets and Liabilities Management Corp. (PSALM).

SMC’s SPPC earlier filed a case against PSALM after the latter illegally terminated its Ippa and treated it as an administrator in default.

SPPC said PSALM’s willful breach of contract was the result of a flawed interpretation of certain provisions related to its generation payments under the Ippa agreement.

It said it honored its contractual obligations under the agreement, paying P239 billion as of August 2017 representing energy fees and capacity fees. For the same period, PSALM also gained P30 billion from its Administration Agreement with SPPC.

“It’s really not an ownership issue. We had paid them so much. If PSALM wants the rates based on WESM [Wholesale Electricity Spot Market], then it should be counted from 2013. If so, they would have to pay us more because WESM rates are low…They should not change the contract on such payment terms that will suit them,” Ang said.

PSALM said SPPC should have sold its generated power to the WESM instead of selling to the Manila Electric Co. (Meralco), especially during the contested period November and December 2013, which could have optimized revenues from the high prices.

SPPC has an existing power supply agreement (PSA) with Meralco approved by the Energy Regulatory Commission (ERC) in 2012 for 1,180 MW capacity from the Ilijan plant.

In approving the PSA between Meralco and SPPC, the ERC said “the approval will ensure continuous and reliable supply of electricity to Meralco’s customers and will minimize, if not avoid, its exposure to volatile prices in the WESM. The proposed rate is also lower than the rate under the Napocor transition supply contract (TSC).

Ang has been saying that PSALM’s insistence on trading the output of the Ilijan power plant on the spot market is a blatant disregard for the welfare of power consumers who should be shielded from, and not exposed to, price volatility.

“The Ilijan power station is used to continuously supply electricity to the grid, including hours when the demand is high. If we sold to the WESM, small consumers would have to pay higher electricity bills. Even businesses, which are the largest consumer of energy, would suffer,” he said.

Turning Points 2018
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