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23 AUGUST 2012

Acquisition of Panay power assets pressed

The company issued this statement late last week after Senator Franklin M. Drilon slammed its move to acquire the transmission assets of Panay Energy Development Corporation (PEDC), operator of the 164-megawatt coal-fired power plant in LaPaz, Iloilo City.

Cynthia P. Alabanza, NGCP spokesperson and adviser for external affairs, said the acquisition of Panay Energy assets will be beneficial to electric power consumers in the long run.

Once acquired, these assets will be linked to the Cebu-Negros-Panay grid.

"The most important consequence of NGCP’s acquisition of these transmission assets is that consumers of power distributor Panay Electric Co. (PECo) in Iloilo City will then have the option of sourcing electricity supply with lower generation charge from sources other than Panay Energy, including the Wholesale Electricity Spot Market (WESM)," Ms. Alabanza explained in the statement.

She said PECo consumers paid a generation charge of P8.2637 per kilowatt-hour (/kWh) last May. By comparison, Antique Electric Cooperative, which sources its supply from WESM, billed a generation charge of P5.8160/kWh to its residential customers in the same month.

The combined generation and transmission charges of other distribution utilities in Panay were also less that month than PECo’s generation charge alone, the transmission firm added.

The transmission company has sought the Energy Regulatory Commission’s approval of its acquisition of transmission assets, including those under the control of Panay Energy.

Panay Energy’s assets covered by NGCP’s application include switchyard, transformers, power circuit breakers, transmission line, supervisory control and data acquisition system, microwave system, and the lot where the switchyard is constructed.

Panay Energy currently supplies power to the Cebu-Negros-Panay grid through NGCP’s Sta. Barbara Substation.

Mr. Drilon, who opposed NGCP’s plan, had described the acquisition of PEDC’s assets worth some P600 million as a "by product of corporate greed" and argued it would jack up electricity rates in Iloilo City by as much as P1/kWh.

Ms. Alabanza said NGCP has legal basis under Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001 (EPIRA), to acquire the Panay Energy assets at fair market price.

"While Section 9 of the EPIRA allows a generator to own, operate and maintain a dedicated point-to-point limited transmission facility, this is only on the condition that said facility is solely used by the generator to connect to the grid and that it will not be used to connect other users," Ms. Alabanza explained.

"Distribution utilities and/or other generators and large customers are not allowed to connect to the facility."

The NGCP official also cited Section 21 of EPIRA which mandates that NGCP, as concessionaire of the National Transmission Corp., is the entity solely responsible for the improvement, expansion, operation, and maintenance of the nation’s power grid.

"No other entity is legally authorized to operate transmission assets and NGCP is the only company technically competent to do so," Ms. Alabanza stressed.

"In the case of the Panay Energy assets, these are not only used to connect PEDC to the grid, but are also used to directly supply power distributor PECo. The assets are also used by another generator, Panay Power Corp.," she noted.

"Therefore, the facility is not a ‘dedicated point-to-point limited transmission facility’ and must be turned over to NGCP."


Read article source in Business World Online