Psalm won’t take PEMC sanctions sitting down, Ledesma says

by Lenie Lectura, February 16, 2015
from BusinessMirror

THE Power Sector Assets and Liabilities Management Corp. (PSALM) may challenge the findings released by the Philippine Electricity Market Corp. (PEMC) for imposing penalties on the former because it allegedly violated the “must-offer” rule of the Wholesale Electricity Spot Market (WESM).

PSALM was among the three companies that withheld their full capacity in the latter part of 2013, according to the January 2015 report of market operator PEMC released last week. This resulted in a spike in WESM prices.

PSALM, along with Therma Mobile Inc. (TMO) and PanAsia Energy Inc., appealed the case before the PEMC but to no avail.

“Due to the denial of our appeal and imposition of charges, we are considering our options to elevate the issue to either the ERC [Energy Regulatory Commission] or proper court since we are questioning the jurisdiction of the PEMC on this,” PSALM President Emmanuel Ledesma Jr. said in a text message when sought for comment.

In its report, PEMC said PSALM’s violation covers the 140-megawatt (MW) Casecnan hydro plant and 650-MW Malaya thermal power plant.

The report did not include how much the three firms were ordered to pay, saying it was up to the firms to divulge since the penalties vary.

“I think its P78 million for Malaya and P11 million for Casecnan,” Ledesma said.

TMO, which is also exploring legal options, said it was ordered to pay P239.4 million for withholding the capacity of its power barges in Navotas.

PanAsia Energy, which operates the 620-MW Limay power plant in Bataan, was also fined by PEMC for violating the must-offer rule. PanAsia is owned by Millennium Energy Inc.

Under the must-offer rule, generation companies registered in the WESM must declare and offer the maximum generating capacities of their power facilities in the spot market.

Aside from PSALM, TMO and PanAsia, there were other power producers that violated the WESM rule but penalties were not meted out against them.

These are AP Renewables Inc.; CIP II Power Corp.; Trans-Asia Power Generation Corp.; Udenna Management and Resources Corp.; Strategic Power Development Corp.; and SEM-Calaca Power Corp.

PEMC, according to its president Melinda Ocampo, only investigates breaches of the WESM rules. Any act of anti-competitive behavior is under the jurisdiction of the ERC.

“When it comes to PEMC our concern is only breaches in WESM rules. When it comes to anti-competitive rules, this is for ERC to find out. It’s beyond [our] jurisdiction,” Ocampo said.

For his part, Energy Secretary Carlos Jerico L. Petilla said PEMC’s findings are as a result of in-depth findings, “bearing in mind that all involved were given a chance to explain their actions.”

The findings, added the energy chief, were based on the work of an independent committee and were affirmed by the board.

When asked to further comment on the findings of PEMC, Ledesma said that PSALM is still studying the specifics of the arguments that it will raise. “In general, case might involve nullification of ERC rules allowing PEMC to investigate even if ERC is already investigating,” added PSALM chief said.

The ERC has yet to release its own probe.

It can be recalled that the Supreme Court ordered the ERC to investigate anti-competitive behavior and abuse of market power allegedly committed by some WESM participants. As such, PEMC conducted the investigations under the “must- run” and “must-offer” rules of the WESM.

The spike in WESM prices resulted in record-high generation charge of Manila Electric Co. to P9.10 per kilowatt-hour in December 2013.