PSALM to transfer 10 Luzon power plants to IPP administrators

The Power Sector Assets and Liabilities Management Corp. (PSALM) intends to transfer 10 Luzon-based independent power producer (IPP) plants to IPP administrators (IPPAs).

The administrators, created under the Electric Power Industry Reform Act (EPIRA), refers to qualified independent entities appointed after public bidding by PSALM to administer, conserve and manage the contracted energy output of the National Power Corp.’s IPP contracts.

As proposed, the IPPAs will handle Napocor’s contracts with a total capacity of 4,221 megawatts (MW).

Included in the list of IPPs to be transferred to the IPPAs are the 1,200-MW Ilijan natural gas combined cycle plant owned and operated by Korean Electric Co. (Kepco)-Ilijan Corp. in Batangas; Pangasinan-based 1,000 MW Sual coal units 1 and 2 operated by Mirant Power Corp.; Mirant’s 700-MW Pagbilao coal units 1 and 2; and the 215 MW Bauang diesel plant of Bauang Power Corp. in Zambales.

Enron Power Corp.’s 116 MW Subic diesel plant and the Casecnan multi-purpose hydro power plant of the National Irrigation Administration in Nueva Ecija are also included in the said list.

Two more hydro power facilities – the 340-MW San Roque multi-purpose hydroelectric of Marubeni/Sithe in Pangasinan and the 70-MW Bakun hydroelectric of Aboitiz Equity Ventures in Ilocos Sur – will also be transferred to the management of the IPPA.

The only geothermal facility that will be handled by the IPPA is the PNOC-Energy Development Corp.’s 440 MW Leyte B geothermal power plant.

The proposed IPPAs may be appointed prior to the commercial operation of the Philippine Wholesale Electricity Spot Market (WESM) but not later than the commencement of retail competition and open access tentatively scheduled in July 2006.

As envisioned in the EPIRA, the IPPAs are tasked to handle the bidding of the IPP’s energy output into the WESM in a manner which optimizes its running hours and net revenues taking account of the cost and price structure in the contract and expected patterns of behavior in the market.

It is also created to seek to negotiate bilateral contracts with customers and/or to sell options (including a variety of financial instruments) or insurance capacity.

The IPPAs has to ensure that PSALM payment obligations under the IPP contracts are minimized.

Based on the criteria set under the law, those that could qualify as IPPAs could be international and local power players and traders, newly-formed energy traders, and IPP sponsors.