PSALM to appeal ERC order


The power firms penalized by the Energy Regulatory Commission (ERC) for breaching the maximum allowable outage days this year will appeal the agency’s decision.

The Power Sector Assets and Liabilities Management Corp. (PSALM) said last week it was “surprised” to learn that it was fined P980,400 for the excess unplanned outage of the Malaya Thermal Power Plant (MTPP) Unit 2 for 21.20 days.

The 350-MW MTPP Unit 2 was out for a total of 49 days but the annual maximum allowable unplanned outage was only 27.8 days for oil-fired thermal plants.

PSALM is of the position that there is sufficient ground to justify the shutdown of 2, which has not been in operation since March 3, long before the red alert and yellow alert incidents in Luzon last May 31 to June 2 this year.

“Penalizing PSALM would be unfair because the Malaya Plant is actually way past its economic life already and it suffers from continuous deterioration in terms of reliability and efficiency. Malaya was on shutdown long before the red alert and yellow alert,” PSALM President and CEO Irene Besido-Garcia said, adding that the state firm tasked to dispose the assets of the National Power Corp. is now preparing to file its motion for reconsideration.

PSALM stressed that the MTPP is a very old plant and is plagued with obsolescence issues. That is why, PSALM said, it had been exerting efforts to privatize the power plant since 2018. MTPP was finally sold via a negotiated bid last May.

It has openly expressed the need to rehabilitate the facility to improve its capacity and efficiency but the state-run firm has no funds to undertake the rehabilitation works. At the time of the red alert and yellow alert at the end of May, the privatization bid deadline concluded and the new owner was declared as the winning party.

“PSALM, at that point, could not implement any changes to the power plant. Any expenses shouldered by PSALM to improve the condition of the plant after the sale will expose PSALM to audit findings of the Commission on Audit,” said the agency.

Based on the report of Soosan ENS Co Ltd. (Soosan), the operator of the MTPP, the Unit 2 encountered a problem and was declared under forced outage last March 3, or long before the subject red alert and yellow alert.

Soosan immediately informed ERC and the National Grid Corporation of the Philippines of the outage on the same day. The assessment of the equipment required the outsourcing of a foreign company expert which could not be immediately procured because of the travel restriction due to pandemic.  The only available automatic voltage regulator (AVR) company could not come in before the privatization deadline set on May 7.

Due to the successful negotiated sale and privatization of MTPP, PSALM said the said AVR assessment was no longer necessary since the new owner has the prerogative on how to repair MTPP.  Further, the winning party, Fort Pilar Energy Inc. has its own plans for the rehabilitation of the plant.

“In view of these underlying reasons, PSALM will submit a motion for reconsideration to ERC to justify why no administrative penalty should be imposed on PSALM for the alleged violation of ERC Resolution No. 10, Series of 2020,” PSALM said.

Lopez-led Energy Development Corp. will also contest the ERC decision.“The company intends to seek reconsideration of this decision and will abide by the final directive of the ERC.”

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