Sual plant trips, spikes WESP prices
Monday, August 14, 2006
By MYRNA M. VELASCO
The tripping of one unit of the 1,200-megawatt Sual coal-fired power facility in Pangasinan last week has triggered new round of price spikes for capacity traded at the Wholesale Electricity Spot Market (WESM); driving up at times the load weighted average price (LWAP) to about P4.00 per kilowatt hour (kWh) as against last month’s P2.80 per kWh.
It was confirmed by System Operator that one unit of Sual may be rendered off-line for about 6 to 8 months because of the damage in its generator stator; and it would take that long for the replacement to be made available. The Sual coal plant comprise of 2 units at about 600-MW each.
To offset capacity lost from Sual, the National Power Corporation (NPC) has to offer to the market its more expensively-run oil-based plants, including one of its diesel plant which was being traded at a high of P18.00 per kWh.
Spot prices have gone up, it was learned, because there are also other plants that were on maintenance shutdown last week, including one unit of the 700MW Pagbilao coal-fired plant; thus, the option would be run more expensive plants.
What worries energy officials now would be on sustaining supply during the higher demand season, including December, if it would take longer for Sual to get back on line and some plants will be on maintenance shutdown; and worse, if some plants will also be set on forced outages due to weather-induced technical glitch, such as in the case of the 1,200-megawatt Ilijan gasfired plant two months ago.
Despite the much-touted P0.79 per kWh reduction that consumers of the Manila Electric Company (Meralco) would be able to enjoy as a benefit from lower WESM prices in July, Energy secretary Raphael P.M. Lotilla cannot assure that this will be sustained given technical and supply constraints that may plague the power system.
Since thinning of reserve capacity thrives as a recurring problem even for Luzon grid, which is still on a surplus mode, he has been encouraging distribution utilities to contract for the needs of their captive markets so they would not constantly face the dilemma of being exposed to price volatilities in the spot market.
"Spot prices are not a substitute for long-term supply contracts which will give stability to prices and facilitate the entry of new capacity to meet future demand," Lotilla stressed.
He added that his department’s policy direction would be to encourage DUs "to enter into long-term supply contracts which would ensure adequate supply at reasonable prices for their customers."
For the widely-criticized rate reduction in electricity rates due to the WESM, the energy chief defended that "the price of energy derived in its first month of operations is relatively low due to the high availability of hydro plants"; and with the cooler season, there are more capacity made available as compared to the occurrence of thinning reserves that happened during the market’s initial run.
Lotilla, however, has apprised the public that "we expect prices to change continuously depending on system conditions, weather patterns, demand and fuel prices."
As the market trails its second month of operations, energy officials note that there are still some concerns to be addressed; noting though that so far, there have been no technical glitches encountered since day one of its commercial run.
posted by philpower @ 10:47 AM,
