PSALM says Malaya not a useless power plant

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM) said the 650-megawatt Malaya Thermal Power Plant is not a useless plant as alleged by Manila Electric Co. (Meralco) after it did not dispatch power during the 30-day maintenance shutdown of the Malampaya natural gas platform.

In defending Malaya’s importance, PSALM president Emmanuel Ledesma, Jr. said for instance that Malaya has a slow start up time and could not have run continuously for 24 hours at the time of the shutdown as it was reserving its capacity when the power grid operate would call for it.

He noted for instance that if Malaya is now traded and dispatched in the spot market, it will run out of fuel by mid-March and will be able to operate again only in mid-June because of its technical limitations.

“This will then deprive the Luzon grid of energy security during the summer, when Malaya is needed the most. In the same way, if Malaya was traded and dispatched in the Wholesale Electricity Spot Market (WESM) at full capacity during the 30-day 2013 Malampaya shutdown, Malaya would have run out of fuel on the 28th day. As a result, Malaya would not be available as must-run unit (MRU) on the 29th and 30th day, or in case of an extended Malampaya shutdown or an unexpected contingency happens. More than ever before, Malaya had to be ready as MRU during the 2013 Malampaya shutdown because of greater contingencies surrounding it compared to previous Malampaya shutdowns,” Ledesma said.

An MRU is a generation facility that can dispatch power when it is demanded at the spot market, the country’s trading floor for electricity. 

Some power generation companies and power distributor Meralco have blamed PSALM for the spike in prices at the spot market during the Malampaya shutdown because of its alleged failure of not trading Malaya’s capacity in the spot market.

Ledesma said the 38-year old Malaya plant has not been trading in WESM due to justifications of technical limitations and financial losses.

“For these reasons, PSALM submits that it did not violate the WESM’s Must-Offer Rule (MOR). The law does not intend or require the impossible,” he said.

“The confluence of the technical limitations of Malaya, such as the slow start-up time, low fuel replenishment rate, high consumption rate, and fuel delivery constraints, render PSALM’s compliance with the must-offer unit (MOR) an utter impossibility. If Malaya is traded and dispatched in the WESM and runs at its full capacity of 650MW to comply with the MOR, it can run continuously for only 28 days, absent any technical problems. It will then take three months for Malaya to refuel and fully operate again, despite round-the-clock refueling while running. During this three-month period, Malaya’s compliance with its more important responsibility as a security plant is put to risk as Malaya will not be fuel-ready, in the event it is needed to avoid brownouts or for grid stability,” Ledesma said.

Furthermore, Ledesma said that Malaya’s vital contribution to the power supply in Luzon for the last three years has been overlooked.

He said that since January 2010, Malaya has actually been dedicated to operate as an MRU and has since then been instructed by the grid’s System Operator, the National Grid Corporation of the Philippines (NGCP) to run for around 92 times for an aggregate period of 454 days, for the purpose of either preventing brownouts arising from planned or unplanned power plant shutdowns, and Malampaya shutdowns, or providing voltage support to stabilize the grid in view of the strategic proximity of Malaya to Metro Manila.