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LKI 56th Press Statement- ERC commits to fast track Power Supply Agreements

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LKI 56th Press Statement  

NOVEMBER 18 2019  



In light of the previously concluded public consultation regarding the 

ERC’s proposal to amend the Secondary Price Cap mechanism of the WESM, consumer group Laban Konsyumer Inc. (LKI) called for the fasttracking of PSA approvals, to boost power supply as soon as possible, amidst thinning energy supply situation. The group also demanded results to be revealed regarding the ERC investigation of collusion among generation companies. 

During the public consultation, LKI President Vic Dimagiba stressed the importance and urgency of a faster and immediate PSA approval by the ERC. This was responded to by Commissioner Catherine P. Maceda committing to the PSAs being approved within the year, by December.  

Dimagiba said “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. This supply is important because this will mean reliable power at low costs. This current power crisis we are experiencing tends to raise prices, on top of causing brownouts and blackouts.”  

Commissioner Maceda also said that there is another measure that ERC is finalizing on reliability performance standards of plants. Dimagiba stated that “currently, 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 lowest cost possible.” 

The group said regarding the public consultation that “At most, the secondary price cap, whether in its current form or as proposed by the ERC, 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.  Any additional compensation will simply be recovered through future WESM charges and customers will still pay for unreasonable and persistent WESM price spikes. That is why we must fast-track the PSA approvals and begin building new power plants immediately.” 

LKI President Vic Dimagiba then explained the urgency for fast PSA approvals, by highlighting how “The best way to mitigate increases in spot market prices is to ensure: (i) entry of additional supply and (ii) the reliable operation of power plants. That is why we must fast-track the PSA approvals.” 

The group explained that “Additional generation capacity brings two benefits: (i) lower prices through a more competitive market and (ii) a more reliable grid, as it will be less vulnerable to outages by one or two power plants.” 

Dimagiba pointed out how “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. We need these new laws and rules… Examples are the EVOSS Law, ARTA, etc. The main implementing agencies of the power sector, DOE and ERC, should lead by example by cutting their own red-tape and expediting the entry new power plants.” 

LKI complained that “Still, reports continue of delays and difficulties in getting permits and approvals from both the DOE and ERC.” 

Dimagiba stressed that “Reliable electric service starts with reliable power plants.  A lower secondary price cap will not protect consumers from brownouts if multiple power plants go out simultaneously.” 

He went on to question “Where is the ERC’s promised report on the Yellow and Red Alerts that plagued the Luzon Grid last summer?  Despite demand coming down after summer, the Luzon Grid still experienced two more Yellow Alerts in October and another one just last November 4. Which power plants went out repeatedly and caused the Alerts?  Are they going to be penalized? Where are the results of the ERC’s investigation on collusion among the generation companies?” 

LKI demands that consumers deserve to know the results of the collusion investigation, because for all we know, there is collusion going on and the generation companies are robbing people of their hard-earned money. The consumer group reiterated their call for quick action and immediate results. 

Dimagiba concluded by saying “aside from cutting red tape both agencies should work together instead of engaging in their own internal intramurals to the detriment of consumers.” 

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