THE Energy Regulatory Commission (ERC) has imposed a P1-million fine on a power generation unit of Lopez-led First Gen Corp. for supposedly offering its supply at an “anti-competitive” price.
The listed energy company apprised the stock exchange on Monday that its wholly owned subsidiary Prime Meridian PowerGen Corp. (PMPC) was served with a notice of violation of Section 45 or the anti-competitive behavior clause of Republic Act No. 9136, also known as the Electric Power Industry Reform Act.
On Aug. 16, 2017, the second unit of PMPC’s 97-megawatt (MW) Avion natural gas power plant in Batangas City deviated from its usual offer price, raising it to P32 per kilowatt-hour (kWh) at one interval from the average price of P5.35/kWh for previous intervals.
Avion had done so to prevent its final 1-MW block of registered capacity from getting dispatched, as it refrained from offering less than the 50.3-MW real-time dispatch schedule it was given in two separate intervals that day. The Wholesale Electricity Spot Market (WESM) rules state that a generating plant cannot shy away from its real-time dispatch schedule by more than -3%, or by 1 MW, whichever is higher.
“By trying to withhold its 1-MW capacity, Avion not only undermined the competition in the market, but also distorted the market price by setting the price at a level that was not reflective of the marginal cost of satisfying the demand in the market,” the ERC said in a 10-page decision signed on July 10.
According to the power generator, due to high ambient temperature during two dispatch intervals, the second plant unit’s maximum generation was at 49.08 MW and 48.85 MW, which do not fall within the prescribed limit set by WESM.
The ERC said that Avion cannot justify its action by claiming its compliance with the market rules, pointing out that it could have dispatched supply within the allowable limit without raising its price, based on the plant’s data.
Its alleged intent not to be dispatched, the ERC noted, goes against the kind of competition it seeks to harness via the spot market. “This particular behavior caused a distortion in the market price which Avion profited from,” it added.
Moreover, the regulator said the supply offer is deemed a market manipulation when Avion allegedly made it appear that it had produced to the extent of its plant’s registered capacity, “when in fact, it has not.”
“PMPC is in the process of reviewing the decision,” First Gen said.
On Monday, shares in First Gen fell 5.01% to close at P23.70 each. — Adam J. Ang
