Malaya plant running out of fuel; Luzon grid teetering into brownouts

by Myrna Velasco – July 27, 2016

from Manila Bulletin

The designated security asset of the power system – the 650-megawatt (MW) Malaya thermal power plant – is running out of fuel, and with the strike of fresh round of “yellow alert” condition on Wednesday (July 27), Luzon grid is in precarious condition of hitting rolling brownouts.

Yellow alert due to crucially thin reserves was declared again by system operator National Grid Corporation of the Philippines, mainly because of the outages and capacity de-rating of some plants.


The 300MW Calaca coal-fired power plant unit 2 was reported to be on “emergency shutdown”; while the generation capacities of Sual units 1 and 2 have been de-rated to 250MW each unit from 647MW.

As to the Malaya plant which is being called upon by the system operator as must-run unit (MRU) on critical supply conditions, it was gathered that it is already “at the risk of fuel run-out any moment from now.”

In a letter to Finance Secretary Carlos G. Dominguez, who is also the chairman of the Power Sector Assets and Liabilities Management Corporation (PSALM) Board, it was indicated that “immediate procurement of fuel and contract award” must be acted upon so the plant could serve its function as MRU and security capacity during risky supply-demand conditions in Luzon grid.

A fuel procurement auction was already undertaken and the declared winning offer had been that of Phoenix Petroleum Philippines, Inc. with a lowest calculated bid of R373.159 million.

PSALM said “in the post-qualification, Phoenix was found compliant with and responsive to all the requirements and conditions as specified in the bidding documents as indicated in the post-qualification evaluation report dated June 14, 2016.”

The approval of the PSALM Board chaired by Dominguez will be needed prior to the award of the contract so deliveries can be scheduled with dispatch. The matter was also referred to Energy Secretary and PSALM Board vice chairman Alfonso G. Cusi.

PSALM Officer-in-Charge Lourdes S. Alzona, in her letter to Dominguez, has noted “should there be a need to operate the MTPP (Malaya Thermal Power Plant) upon request of the system operator, and if MTPP unit 1 goes on-line after rehabilitation, running both units of the MTPP will cause the present fuel inventory to be depleted by 15 July 2016.”

As of July 5 this year, it was noted that fuel inventory at the Malaya plant had been at 32,268,560 liters – and from that level, it was projected that fuel run-out could be experienced at the facility’s unit 1 by August 7; and unit 2 by August 11 this year.

PSALM further projected its fuel inventory “to last up to the month of August, in time for the award of the new contract to the winning bidder.” It emphasized that this was “based on the assumption that only MTPP Unit 2 will operate, running at a 130MW capacity.”

It explained further that utilization of fuel had been accelerated due to the request of the Department of Energy then to operate the Malaya plant during the election, hence, its fuel supply inventory had been affected.

As a must-run unit, the WESM rules prescribe that this generating unit is identified and instructed, on real-time or scheduled basis, by the system operator to come on-line or provide additional energy on a particular trading interval, but the dispatch of which is said to be out of merit, to address system security requirements.