Amended PPA of First Gas to benefit customers
Thursday, June 22, 2006
By MYRNA M. VELASCO
Electricity consumers being served by the Manila Electric Company (Meralco) will be able to benefit from the three-tiered concessions provided for in its amended power purchase agreement (PPA) with First Gas Power Corporation given that the latter’s power generation plants are dispatched beyond contract levels.
In a 51-page ruling handed down by the Energy Regulatory Commission, it was indicated that if the 1,000-megawatt Sta. Rita and 500-MW San Lorenzo plants of First Gas will be dispatched up to 92 percent of installed capacity, a discount of P0.1089 per kilowatt hour (kWh) can be passed on by the utility firm to its customers.
This will come from benefits from acceptance recovery shortfall that would amount to P0.0578 per kWh; tax relief of P0.0456 per kWh and discount on excess generation at P0.0055 per kWh.
However, if the plants will just be dispatched at contract level or the socalled minimum energy quantity which is set at 83 percent out of aggregate capacity, the savings to consumers will just come from the reduced taxes at P0.0473 per kWh.
The same scenario applies if dispatch is constrained at even lower level of 73 percent; indicating that only P0.0523 per kWh will be passed on to consumers.
It was also shown that after the seven items amended in the First Gas-Meralco PPAs both for Sta. Rita and San Lorenzo assets were incorporated, the kilowatt-hour rates of generated electricity delivered to the utility firm would be higher at P5.0460 per kWh if dispatched at 73 percent; though this has been lower prior to the amendments in the supply deal. The preamendment rate was set at P5.0983 per kWh.
Meanwhile, at 83 percent dispatch, the rate would be lower at P4.4494 per kWh from P4.4967 per kWh pre-PPA amendment; and even cheaper at 92 percent dispatch at P4.3239 per kWh (as compared to the previous P4.4328 per kWh).
It would be gleaned from the three variations in dispatch that the cost difference between the 73 percent to 83 percent utilization is P0.5966 per kWh; while that of 83 to 92 percent is P0.1255 per kWh.
"The overall impact of the amendments is a reduction in Meralco’s purchased power cost regardless of dispatch, particularly because of FGPC and FGP’s concession to shoulder taxes," the ERC has noted in its decision.
Given the calculated savings that would benefit consumers, Meralco has been directed "to pass on to ts customers whatever discounts it may derive from he effects of the ruling" on its amended PPAs with First Gas.
On the acceptance recovery shortfall, the prevailing set-up prior to contract revisions was that the contracted energy not consumed by Meralco would only be valid over 12 months from the time it is incurred.
Under the modified deal, the recovery of such has been extended until 2011; but is limited to the energy consumed beyond MEQ; capped only at 7.0percent.
On the other hand, the prescription on variations in the schedule of dispatch has been limited to 1.5 percent, instead of the previous 5.0 percent.
As a matter of illustration, it was noted that if the scheduled dispatch is 1,000 MW and the plant generated 950-MW or 1,050 MW; the variation would be 5.0-percent; and Meralco has requested that for ease of operation, this shall be limited to 1.5-percent.
Meanwhile, the ERC has emphasized that the concessions derived from the revised deal will be revenue-neutral to Meralco; as all these would be passed on as savings to consumers.
posted by philpower @ 10:01 PM,
