PSALM pushes bulk deals for geothermal power plants

The Power Sector Assets and Liabilities Management (PSALM) Corp. will privatize the bulk energy contracts for the typhoon-ravaged Unified Leyte Geothermal Power Plant (ULGPP) in Leyte and Mt. Apo 1 and 2 geothermal power plants in Mindanao.

PSALM president and CEO Emmanuel R. Ledesma, Jr. said in a text message that the state firm would rebid the contract for the 650-megawatt (MW) ULGPP in September 2015.

The independent power producer administrator (IPPA) contracts for Mt. Apo 1 and 2 geothermal plants (each with a rated capacity of 54.24 MW) are up for auction in the third quarter of 2014, he said.

Apart from generating cash for the settlement of the National Power Corp.’s debt, PSALM said the sale of the energy contracts would also encourage diversification in the energy market.

The bids are not limited to generation companies. Even distribution utilities, such as electric cooperatives, and other interest groups may participate as well, Ledesma said.

In November 2013, Energy Development Corp. (EDC) of the Lopez Group won the bid but decided to back out of the ULGPP bulk power deal. In a disclosure to the Philippine Stock Exchange, it said the facility was severely damaged when Supertyphoon Yolanda made landfall. The damage changed the “physical and economic conditions” underlying the bidding of the power administration deal for ULGPP.

The facilities have been partially repaired and all units should be back in full operation “around August,” depending on the availability of spares, EDC president and COO Richard B. Tantoco earlier said.

PSALM said it would adopt the same legal and commercial structures that were used in the selection and appointment of IPPA for the bulk energy of ULGPP, which PSALM auctioned off last October.

The typhoon struck on Nov. 8, when the state firm declared the winning bidders for the right to market portions of the power facility’s output that had been contracted by the government.

The Mt. Apo IPPA covers two government IPP contracts in Mt. Apo 1 and 2 geothermal power plants with contracted supply of 390 gigawatt-hours (GWh) and 398 GWh a year, respectively.

The Mt. Apo plants, each with a rated capacity of 54.24 megawatts, are located in Kidapawan City, North Cotabato. Owned and operated by the EDC, the power plants were commissioned on Feb. 15, 1997 (Mt. Apo 1) and June 17, 1999 (Mt. Apo 2) under a build, operate and own contract scheme. The cooperation period for both plants is 25 years. It will expire on Feb. 15, 2022 and June 17, 2024, respectively.

EDC also operates the ULGPP facilities composed of the 125-MW Upper Mahiao, 232.5-MW Malitbog, and 180-MW Mahanagdong power plants, as well as the 51-MW optimization plants. ULGPP is covered by power purchase agreements with Napocor.

EDC’s Leyte Geothermal Production Field supplies the steam used by ULGPP for power generation. EDC has said the steamfield lines remained operable despite the damage wreaked by Yolanda.