Aboitiz plant fined P234.9M but denies must-offer-rule violation

by Myrna Velasco, February 11, 2015
from Manila Bulletin

A penalty amounting to P234.9 million was imposed by the board of the operator of the Wholesale Electricity Spot Market (WESM) against the Therma Mobile Inc. (TMO) facility of the Aboitiz group – although, this was vehemently denied by the power generator.

In a disclosure to the Philippine Stock Exchange (PSE), the Aboitiz group has indicated that the Philippine Electricity Market Corporation (PEMC) “initially found that TMO withheld capacity during the period under investigation,” – that was in reference to the critical months of November-December 2013 when prices in the spot market went haywire.

It added that in a letter dated January 30, 2015, “the PEM Board imposed financial penalties amounting to P234.9 million on TMO.”

The plant has 234 megawatts of total installed capacity, but around November 2013, it was clearly laid down that the capacity set for delivery to Manila Electric Company (Meralco) under their off-take agreement was just at 100MW.

Referencing on that, TMO argued “it did not withhold any capacity for the period covered, as it was physically impossible for TMO to transmit more than 100MW to Meralco.”

According to TMO president and chief operating officer Jovy P. Batiquin, the engines of the plant as well as the 115kilovolt (kV) line cannot be forced “to produce and deliver more than 100MW at that time” because it could “cause a collapse of the line and could trigger a much-bigger problem for the Luzon grid.”

He stressed “this temporary limitation of the power plant was confirmed during a dependable capacity conducted in November 21, 2013 and in subsequent tests.”

The board of the electricity spot market has stipulated “the penalties will be collected from TMO through WESM settlement process.” But the Aboitiz firm has insisted “there is no basis for the PEMC decision.”

TMO has reiterated “it followed the rules and delivered all its available capacity to its customer Meralco,” hence, it categorically disputes the findings of the spot market operator.

The Aboitiz company formally took over the operation of the four barge-mounted bunker-fired power generating facilities in November 2013. Since it was on an idle mode for a long time, the facility badly needed rehabilitation before it could be ramped up to maximum generating capacity.