750MW from Malaya overhaul, ILP to help Luzon

Some 750 megawatts of power capacity may be available by early 2015 to ease the power crunch that could plague Luzon with outages in the summer months.

The Power Sector Assets and Liabilities Management (PSALM) Corp. said a Korean firm might be able to rehabilitate the 300-MW unit of the Malaya coal-fired power plant in Rizal province by early next year, as part of its one-year operation and maintenance service contract (OMSC) for the facility.

This adds to the supply side of the closely watched energy market for the summer of 2015.

Apart from the restoration of the 300-MW unit of Malaya, the government is also counting on the Interruptible Load Program (ILP) in cooperation with distribution utilities such as the Manila Electric Co. (Meralco).

The country’s top distribution utility alone may sign up 450 MW of self-generation capacity from customers in its franchise area.

This is seen curbing the demand side of the energy market, easing the strain on the supply side of the power equation next year.

In a text message, PSALM president and CEO Emmanuel R. Ledesma Jr. said that STX Marine Service Co. Ltd. should be able to overhaul Unit 1 of Malaya within 90 days from the notice to proceed, which could be out by November.

On September 30, PSALM sent the notice of award to the Korean firm for the OMSC in 2015.

The Malaya facility is a “must-run” facility designed to operate when power supply is tight in the Luzon grid.

The rehabilitation will deliver the much-needed additional capacity for Luzon by summer, said Energy Secretary Carlos Jericho Petilla.

The 650-MW Malaya power plant is in Pililla, Rizal province, and is being managed by PSALM through OMSC contractors.

It consists of a 300-MW unit with a once-through type boiler and a 350-MW unit fitted with a conventional boiler.

It was rehabilitated in 1995 by the Korea Electric Power Corp. under a 15-year rehabilitate-operate-manage-maintain agreement.

As for the ILP, Meralco president and CEO Oscar S. Reyes said the country’s top distribution utility had signed up enough customers with power generation sets to aggregate “roughly 300 MW” of capacity.

“About 450 MW is possible and we continue talking with potential ILP participants in our franchise area,” Reyes said.

That means about 450 MW of power demand may be eased from the Luzon grid when ILP is triggered next summer.

However, Petilla said power consumers must still prepare by curbing electricity use.

Outages are possible depending on the timing and size of unplanned power plant outages, effects of drought on hydroelectric power generation, and the impact of the new Malampaya gas platform installation off Palawan on gas-fired power plants.

He added that it was not likely that all of the registered ILP capacity can be eased from the grid at the same time because the participants will decide if and when they will actually use their respective generation sets.

The Department of Energy has come up with several scenarios on the power gap expected in Luzon by the summer of 2015, ranging from 300 MW to as much as 900 MW.

There have been suggestions from various business leaders for regulators to lift the second layer of price caps in the energy market to free up about 1,000 MW of power capacity from peaking plants that use expensive fuel, thus demanding higher prices to operate viably.

However, this has not gained ground as regulators fear that lifting the so-called secondary cap could result in price spikes like those seen at the end of 2013.