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ERC reviewing allowable power plant outage levels

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THE Energy Regulatory Commission (ERC) said it is reviewing the reliability index that typically sets the allowable outages for energy facilities, to improve monitoring and set appropriate penalties.

“We are reviewing the reliability indices based on the petition filed by PIPPA (Philippine Independent Power Producers Association, Inc.) to make sure the indices are real measures of operational performance,” ERC Chairperson Monalisa C. Dimalanta said via Viber.

“We can then improve our monitoring tools and impose appropriate penalties,” she added.

The reliability index in force since 2020 allows the ERC to set the maximum days of planned and unplanned outages per year, varying by generating plant technology.

The ERC reviews non-compliance of power generators and issues notice with an order to comply and to explain. It will then impose fines and penalties to those that refuse or fail to comply.

The ERC reported that five power generation companies exceeded the unplanned outage allowance as of April 30, a period when the power grids declared red and yellow alerts.

Ms. Dimalanta said the ERC hopes to complete the review within the month.

At a forum last week, Ms. Dimalanta said many distribution utilities (DUs), primarily electric cooperatives, had nearly 100% exposure to the Wholesale Electricity Spot Market (WESM) over the last two months during the heatwave and subsequent red alerts.

“Almost all of their supply came from the WESM. They do not have bilateral contracts where  the price is locked in, where the supply is assured,” she said.

Ms. Dimalanta said that the ERC monitored about 30 DUs with 25% to 100% WESM exposure and verified whether they have power supply agreements (PSAs) for approval and whether they have asked for provisional authority.

“Hopefully, for the next few months, we will be able to clean up that list,” she said.

WESM is where energy companies can buy power when their long-term contracted power supply is insufficient for customer needs, but they pay a premium for spot power.

Meanwhile, Ms. Dimalanta said the ERC expects more consumers to choose their own suppliers as the threshold for the Retail Competition and Open Access (RCOA) falls.

“As we lower the threshold for RCOA over the next 4-5 years, we see more consumers migrating from being captive by their DUs (distribution utilities) to being contestable customers choosing their own suppliers,” she said via Viber.

Under the Electric Power Industry Reform Act of 2001, qualified contestable customers, or end-users consuming at least 500 kilowatts a month, may choose their own power suppliers under the RCOA scheme.

End-users are given the opportunity to participate — on a voluntary basis — in the Competitive Retail Electricity Market, allowing them to choose from an array of power suppliers that offer cheaper electricity.

Captive customers are those served by DUs in areas which they are based.

During the forum, Ms. Dimalanta said the ERC projects that the conduct of the competitive selection process (CSP) “will not be as dominant in the space as we see them now” in the next few years.

She said that more consumers will migrate to the contestable market and “there will be less of the captive consumers that DUs will need to contract for.”

“In that near future, there will be fewer customers served by DUs under PSAs. So there will be less relevance for CSPs because customers will be contracting directly for their own supply,” Ms. Dimalanta said.

The government requires DUs to select the cheapest electricity through a CSP. — Sheldeen Joy Talavera

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