PSALM turns over Sual, Pagbilao power plants to respective IPPAs

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM) has formally turned over the administration of the contracted capacities of the National Power Corp.(NPC) in the coal-fired Sual and Pagbilao power plants to their new independent power producer administrators (IPPAs), San Miguel Energy Corp. (SMEC) and Therma Luzon Inc., respectively.

The turnover was held a few months after PSALM successfully conducted last Aug. 28, the second round of bidding for the appointment of IPPAs to administer the contracted capacities of Napocor in the Sual and the Pagbilao power facilities.

In August this year, SMEC and Therma won the bid to become the independent power producer (IPP) administrators for Sual and Pagbilao, respectively.

Under the IPPA agreement with PSALM, the winning IPPAs will be the one to handle the procurement of the power plant’s fuel requirements.

SMEC offered $1.072 billion for the management and control of Napocor’s 1,000-megawatt (MW) contracted capacity of the Sual.

Therma Luzon, on the other hand, was declared the highest bidder for Pagbilao coal-fired power plant’s supply contracts with an offer of $691 million.

Aside from procurement of fuels, the winning IPPAs will also manage the contracted capacities of the Napocor in the Sual and Pagbilao power plants. Both power facilities are being operated by Team Energy under a build-operate-transfer agreement.

The 1,700-MW aggregate contracted capacities of the two power plants represent around 34.7 percent of the contracted capacity of the IPP contracts for Luzon and the Visayas.

The turnover of the management of the contracted capacity of the Sual power plant was conducted at 12 midnight of Nov. 6, 2009 in Pangasinan through a meter reading of the power generation and an inventory of the coal and oil supply as stipulated in the administration agreement.

The meter reading was held to verify the quantity of electricity delivered by the IPP to the grid reckoned from the time SMEC, as administrator, took over the management of the contracted capacity of the Sual facility.

The same procedure was carried out at the Pagbilao plant in Quezon at 12 midnight of Oct. 1, 2009.

Both activities were witnessed by officials and representatives from the National Grid Corporation of the Philippines, SMEC for Sual, Therma Luzon for Pagbilao, Napocor and PSALM.

The turnover grants SMEC and Therma Luzon the authority to administer the trading of the power produced by their respective power facilities in the Wholesale Electricity Spot Market (WESM), thereby spurring competition in the electricity market.

Aside from trading their power output in the WESM, SMEC and Therma Luzon will be responsible for procuring coal and other fuel for their power plants, and closely coordinating with the plant operators to ensure that the power they generate matches their respective bids.