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LKI 2020-010 PRESS STATEMENT
FEBRUARY 25, 2020
LABAN KONSYUMER CALLS FOR GENERATION COMPANIES TO BE ACCOUNTABLE, WARNS AGAINST SPOT MARKET PRICE MANIPULATION
DURING POWER PLANT SHUTDOWNS DURING SUMMER MONTHS AND
DEMANDS MORE CAPACITY FROM GOVERNMENT
In a letter addressed to and acknowledged by Mr. Mario C. Marasigan, CESO III Director, Electric Power Industry Management Bureau Department of Energy, consumer group Laban Konsyumer Inc. (LKI) addressed the latest power supply situation concerns and statements by the Department of Energy (DOE), writing “We consider our absence in the press conference as an opportunity to respectfully submit and be heard, the following position paper, all for the purposes of ensuring that the consumers enjoy their right to information and right to basic needs and services at reasonable prices and in this case, electricity.”
Laban Konsyumer Inc. (LKI) President Atty. Vic Dimagiba stated “The DOE thru Mr. Mario Marasigan, made a public statement that power plants should not perform maintenance activities during the months of April, May and June. This statement should have been made by the power plant owners themselves. We lament the absence in the press conference of the members of the Philippine Independent Power Producers Association or PIPPA, and the latter should have been present to inform consumers of the power supply and maintenance schedule during the summer months. Plant outages do happen especially in the summer months.”
The group explained that “If the PIPPA members will not submit a voluntary disclosure of the power plants maintenance schedules, then the maintenance schedule is nevertheless available to the DOE, and therefore, the DOE should release to the public and all stakeholders the current 3-year schedule, i. e. 2020 to 2022 of the Grid Operating
Management Program , or GOMP , which are currently made available only amongst the PIPPA members , the Department of Energy , the Energy Regulatory Commission , and the National Grid Corporation of the Philippines.”
Dimagiba highlighted that “On the part of the Laban Konsyumer Inc., we filed a Petition in December 2019 with the Energy Regulatory Commission to release the current 3 year maintenance schedule but unfortunately, the Commission had sat on the Petition without any action taken. The maintenance schedule of the power plants are not commercial and proprietary information. The disclosure of such information promote accountability and transparency and serve the purpose of checks and balances amongst the stakeholders, regulators and consumers. All types of consumers, whether industrial, commercial and residential can better prepare their operational plans during the period.”
For background: In 2019, there were 51 Yellow alerts and 15 Red Alerts and registered a record high in terms of Wesm prices. The Load Average Weighted wesm prices shot up to Php 7.89 pkwh while the lowest is Php 2.06 pkwh. The consumers absorbed the high Wesm prices as a passed on costs from the Distribution Utilities and Electric Cooperatives. The details are attached to this letter. The ERC proposed to lower both the trigger from Php 9/kwh to Php 6.919, and the secondary cap from Php 6.245 pkwh to Php 4.508 but the Circular remained a draft proposal.
LKI recommended “There are two (2) measures the DOE can do so that consumers are not the sole shock absorbers of spikes in electricity costs.
First, the Distribution utilities and electric cooperatives should reject price offers that will result to unreasonable spikes in the WESM prices. The power plants trading in the spot market who think they will make more money via frequent and extended shutdowns can lose money, lose customers or be investigated for prices manipulation. Actually, Meralco had introduced changes in their Power Supply Agreements.”
In ERC Case No. 2019-079 RC, the ERC Order stated that “the PSA would redound to the best interest of the consumers since the supply availability is guaranteed 100%, as no outage allowance is provided therein. This provision imposes the liability of paying for higher replacement power upon the supplier and not the consumers”. This modality can be adopted in the trading in the spot market.
Second, just as the power plants should behave in the trading market, the Government, should absorb the Wesm spikes and issue credit to power plants.
Dimagiba proclaimed “It is the responsibility and role of the Government to add plant capacity. Government should accept the mea culpa and takes full accountability for the failure of the power plant development program and the absence of more power companies, more power plants slashing each other’s throat in competition to provide reliable 24/7 electricity at competitive prices. LKI learned that DOE had proposed a Causers Pay policy, consultation were held, but nothing happened.
Further, ten years ago, the DOE ordered the registration of all standby generators of industrial, commercial and residential establishments. The proposal can be a recommendation to expand the ILP coverage.
In Luzon, Meralco has an ILP program.”
The group maintained that “The DOE and the NGCP and the other large DUs and ECs in Luzon should enroll their own customers with gensets. We proposed that a
Memorandum of Agreement be in order between the DOE and the establishments to participate in an Energy Crisis Reduction and Control by sharing their embedded energy capacities in the interim emergency during the summer months by operating their standby generators and facilities to supply power to their respective loads and possibly do feed excess capacity to the grid thus reducing demands from the grid and avoiding brownouts.”
It was pointed out that the participating establishments shall operate their standby capacities in coordination with the DUs, ECs and LGUs with directive from the System Operator and IMO and regulated by the ERC with rules formulated by the DOE. The participating establishments shall provide their own switching, relaying, and synchronizing and protection facilities to operate their generating plant GRID TIED thru the DUs, ECs, and the LGUs. Net tariff meters shall be provided by the DUs, ECs and LGUs to measure and record the energy supplied by the establishments embedded capacity delivered to their load or grid over the time designated by the IMO/ISO. The KWH delivered by the standby gensets (embedded gensets) of the participating establishments shall be compensated/credited to their electricity bill at the billing period. The electricity rate shall not be less than the charges of the DUs, ECs and LGUs and shall include an operating accommodation fee proportionate to the rating of the plant.
Finally, the group concluded by pointing out “We urge the DOE to name the companies behind the generating plants that caused price manipulation in 2019. The power plants should behave to ensure stable supply. The PEMC investigation of price manipulation and violations of trading rules was completed and the report had been submitted to the ERC as well as to the DOE. There is no legal reason to withhold the release of the report for those generating plants that had violated trading rules that resulted to spikes in Wesm prices.”
Dimagiba ended the letter advising “By this time, price manipulation cases should have filed against the erring power plants.
In brief, the consumers believes that the DOE is an ally to ensure stable supply and reasonable prices of electricity all year round. Our team is ready to participate in other stakeholders’ forum on the subject matter.”
The letter was sent to by email and received by SEC. ALFONSO CUSI and USEC. WILLIAM FUENTEBELLA of DOE. As of date, no email acknowledgement have been received from CHAIRPERSON AGNES DEVANADERA of ERC, Atty. Anne EstorcoMontelibano of PIPPA, Ms. Ma. Cynthia Y. Manrique/ Mr. Fidel Dagsaan of NGCP and SVP Larry Fernandez of Meralco.
For any inquiries or concerns, you may reach LKI President Atty. Vic Dimagiba at 0917812-5546. Visit our updated website at www.labankonsyumer.com, on Facebook at
Laban Konsyumer Inc. and email us at firstname.lastname@example.org