An official of a consumer group welcomed the commitment of the Energy Regulatory Commission (ERC) on the immediate approval of proposed power supply agreements (PSAs) between distribution utilities and power generators to address thin supply.
In a statement Monday, Laban Konsumer Inc. (LKI) President Vic Dimagiba dubbed as “encouraging news” the statement of ERC Commissioner Catherine Maceda that approval of the PSAs is expected by December.
“This is encouraging news hearing that the ERC will already act on the PSAs within the year because this will mean additional power capacity to the grid as soon as possible. We hope that ERC will live up to its promise and commitment to already act on the PSAs and approve this much-needed capacity for the grid,” he said.
Dimagiba said the additional capacity would ensure power supply at a low cost.
The ERC is proposing to lower secondary price cap (SPC) at the WESM to reflect the current market condition.
To date, SPC is about PHP6,245 per megawatt-hour (MWh) but ERC is proposing to cut this to PHP4,502 per MWh.
In a draft resolution sent to stakeholders, the ERC said the SPC proposal aims to address price spikes when supply is tight.
The proposed SPC is suggested to be implemented once the 72-hour rolling generator weighted average price has been breached.
Dimagiba, meanwhile, said the SPC “will just defer costs that will be paid by consumers”.
“The rules still allow generators to ask for additional compensation if they were allegedly affected by the secondary cap,” he said.
This is the reason for the need to fast-track PSA approval and start the construction of new power plants as soon as possible, he said.
He added that the best way to address upticks in the prices of power supply in the spot market is for the assurance of additional supply and the reliability of power plant operations.
“New laws and rules were introduced because the government wants to cut red-tape, including those blocking power plant development. As is, our power supply situation is extremely thin and we are already delayed in our additional capacity timeline,” he said.
Meanwhile, the ERC assured stakeholders that the Commission is also finalizing the reliability performance standards for power plants.
Dimagiba said this measure would greatly benefit the sector because “there are power plants being forced to go on outage because of their age and inefficiencies.”
“If we can fast-track the PSA approvals, this will mean more advanced, healthier and newer power plants online, and more dependable capacity for the consumers at the lowest cost possible,” he added.