TO prevent a possible power- rate increase in Mindanao, Energy Secretary Carlos Jericho L. Petilla said the winning bidder in the auction for the output of the 200-megawatt (MW) Mindanao coal-power plant could not adjust the power rates it will charge to electric cooperatives and distribution utilities.
“It’s okay for PSALM [Power Sector Assets and Liabilities Management] to push through with the auction. However, there should be a locked-in period, so that there won’t be a spike in power rates,” Petilla said in an interview.
The lock-in period requirement, which, Petilla said, will be included in the terms of reference, is to take effect for two or three years after the deal is signed.
Early this month, Petilla said he requested suspended PSALM President Emmanuel Ledesma Jr. to push back the privatization of the supply contracts for the output of the Mindanao coal.
The power plant supplies about a fifth of Mindanao’s power requirements. Petilla is concerned that an early auction could result in power- rate hikes. He explained that electric cooperatives would be forced to source power from the winning bidder, which, in turn, could dictate prices, owing to lack of competition.
The delay, Petilla had said, could last “until such time the power plants of Aboitiz, Alsons or San Miguel have been put up.”
He pointed out that a better scenario would be to privatize the contracted capacity of the Steag coal-fired power plant in Misamis Oriental sometime within the first half of 2016, when the new power plants of the power-generation companies are expected to come on line.
“It’s better to hold off the privatization so that the consumers won’t be burdened only until such time when at least two power plants are up and running, which is actually very soon, maybe in the first half of 2016,” Petilla had earlier raised.
Last week the state company scheduled the bidding for the selection and appointment of the independent power producer administrators for the bulk energy of the Mindanao Coal-Fired Thermal Power Plant (Mindanao Coal) on September 23.
PSALM also met with the 12 prospective bidders for the Mindanao Coal, namely, Conal Holdings Corp., FDC Davao del Norte Power Corp., FirstGen Northern Power Corp., GDF Suez Energy Philippines Inc., Masinloc Power Partners Co. Ltd., Meralco Powergen Corp., Nexif Pte. Ltd., SMC Global Power Holdings Corp., SPC Power Corp., Team (Philippines) Energy Corp., Therma Southern Mindanao Inc. and Vivant Energy Corp.
When asked if these prospective bidders would still join the auction despite the lock-in period requirement, Petilla, who sits as vice chairman of the PSALM Board, said, “It’s up to the them if they want to pursue their bid or not.”
Located in Misamis Oriental, the Mindanao coal plant was constructed in 2006 under a 25-year build-operate-transfer-power purchase agreement scheme with the government. The power facility is made up of two units with a generating capacity of 105 MW each. It is currently being operated by Steag State Power Inc. of Germany.
The cooperation period with the operator officially ends in 2031.