ERC upholds NPC’s natural gas costs
Monday, March 26, 2007
By MYRNA M. VELASCO
A ruling issued recently by the Energy Regulatory Commission (ERC) has upheld an earlier Order allowing cost recovery for P26.195-billion worth of natural gas, including banked fuel that have not been fully utilized for electricity generation of the 1,200-megawatt Ilijan facility in Batangas.
of such costs as a component of the generation charge billed to customers by the National Power Corporation.
In a joint filing made by NPC and its transferee-company Power Sector Assets and Liabilities Management Corporation (PSALM), it was shown that the state-run power firm logged accumulated shortfall of its gas off-take from October 2001 to 2004. The dispatch of the gas plant was at a staggering 28 to 50-percent on those periods.
As stipulated under the gas supply and purchase agreement (GSPA), when situations that shortfall in the gas supply off-take arise, this can be treated as a reduction in NPC’s future take-or-pay quantity.
However, in the event that gas procurement surges, the volume taken beyond the contracted capacity will be free of charge.
It was specified in the documents submitted to the ERC that the level of generation of the Ilijan plant was way below contract levels from January 2002 to June 2005 due to problems of congestion in the transmission network.
"It is significant to note that NPC has an accumulated shortfall for the period October 2001 to calendar year 2004," the ERC emphasized.
However, NPC was just allowed then to recover the allowable fuel cost based on actual fuel consumption; but the power firm justified that it must be allowed to recover within its gas contract level as anchored on its GSPA.
NPC has a take-or-pay obligation with gas seller Shell Philippines Exploration B.V. for a daily contracted capacity of 164 Terajoules (TJ), which is intended for a plant with a capacity factor of 80-percent or average generation of 960 megawatts. The annual contracted capacity is placed at 59.86 Petajoules.
In view of a provision set forth under Section 32 of the Electric Power Industry Reform Act, NPC was initially prohibited from passing on generation charge and fuel costs for some plants, including Ilijan, because of its failure to secure approval of their rates with the defunct Energy Regulatory Board (ERB) on the prescribed cut-off date of December 31, 2000.
In the ERC’s original ruling, it was emphasized that the Ilijan capacity fee to be lumped in NPC’s charges shall be denominated in US dollars at a rate of $ 7.25376 per kilowatt-hour per month.
The Ilijan project is under a 20-year Build-Operate-Transfer agreement with Kepco Ilijan Corporation (Keilco), a local subsidiary of Korea Electric Power Corporation. The project contract commenced February 5, 1998.
The regulator pointed out that the Ilijan project yields benefit to the Philippine government via royalty share from the utilization of gas fuel from the Malampaya field; and at the same time, in providing job opportunities for the Filipinos.
By the same token, utilizing gas as a fuel likewise provide quantitative benefits in terms of reduced emissions and in creating much-needed opportunity for the country to further trim down reliance on imported energy resources. (MMV)
posted by philpower @ 6:47 AM,
