May 26, 2015

Malampaya one-month shutdown starts this week

The Businessworld reports that the official probe on the suspected trading irregularities at the Wholesale Electricity Spot Market (WESM) that led to record-high rate hikes at the end of 2013 has been completed. The report was submitted to the commissioners of the Energy Regulatory Commission (ERC) last Friday, with a ruling expected to follow soon.

ERC’s investigation started early last year amid allegations of collusion among power generators that led to record increases in power generation charge late last year. For consumers served by Manila Electric Co (MER), the power generation charge would have increased by P4.15//kWh in Dec 2013 and another P5.33/kWh in Jan 2014. The Supreme Court issued a temporary restraining order preventing the rate hike and directed the ERC to investigate the case.

Reportedly, the ERC investigation also took into consideration a report of the Philippine Electricity Market Corp (PEMC) on violations of market rules. The WESM operator’s report -- which was submitted to the ERC’s Investigation Unit in Aug last year -- identified the generation companies that breached the “must-offer rule.” Under this rule, power generators are required to offer all available capacities at WESM when called to do so by the market operator.

Last Jan, the PEMC fined three companies that violated the rule, namely: Aboitiz Power Corp’s (AP) Therma Mobile, Inc. (TMO); state-owned Power Sector Assets and Liabilities Management Corp (PSALM); and PANASIA Energy, Inc. TMO has since disputed this claim and elevated the case to the Pasig City Regional Trial Court, which in turn issued a writ of preliminary injunction against PEMC. Six other companies were also found to have violated the rule but were only reprimanded. - WealthSec