ERC: 3 gencos exceeded limit for unplanned outages

BY LENIE LECTURA – OCTOBER 21, 2021
from Business Mirror

State firm Power Sector Assets and Liabilities Management Corp. (PSALM), Lopez-led Energy Development Corp. (EDC) and SPC Island Power Corp. (SIPC) exceeded the limit for the allowed number of days that power plants should undergo shutdown, the Energy Regulatory Commission (ERC) said in separate decisions released Thursday.

The three firms are among the 17 power generation companies (gencos) that received show-cause orders from the ERC last June. They were asked why they should not be held liable for breaching the maximum allowable unplanned outage days for 2021.

PSALM’s Malaya Thermal Power Plant (MTPP) Unit 2 was on unplanned outage for 49 days, 21.2 days more than the maximum allowable unplanned outage days for an oil-fired thermal plant, from January 3 to April 25 this year.

The cause of the incident, PSALM said, was “the AVR of the generator excitation system of the MTPP Unit 2 switched to auto.”

PSALM argued that repair “may no longer be necessary” because of the “successful negotiated sale and privatization” of the MTPP to Belgrove Power Corp. for P4.2 billion.

The ERC found PSALM liable, saying the latter’s inaction and negligence in procuring the services of an AVR specialist cannot be justified merely on the basis of ongoing privatization negotiations.

“PSALM’s negligence to timely and effectively respond to the outage incident since March 3 constitutes a grave dereliction of its responsibilities to the public. Its attempt to rationalize its inattention and inaction highlights the fact that PSALM is shrinking from its duties and responsibilities as an agency involved in an indispensable industry,” it said.

The ERC said it is PSALM’s duty to ensure that the MTPP is properly maintained given its crucial role in ensuring that it is able to deliver power, particularly during supply shortfall. “It cannot just simply shrink its responsibility without the risk of being called upon.”

PSALM was ordered to pay the penalty of P980,400. “The penalty imposed on PSALM took into inconsideration the parameters for measuring reliability under ERC Resolution No. 21.”

EDC was fined P1,022,400 for the 22.64 excess days of unplanned outage days of its Nasulo Geothermal Plant  Unit 1 from January 3 to April 25 this year.

Geothermal plants should not exceed 13.7 days of annual maximum allowable unplanned outage.

EDC said the plant conked out due to “activation of the main transformer on land tap changer surge relay.” This incident, EDC added, was outside its management control.

But the ERC said EDC’s argument “does not pass muster,” and that it failed to prove the existence of due diligence and absence of negligence on its part prior to the unplanned outages.

The ERC, in its findings, said necessary precautionary measures could have been exercised to prevent the auto-tripping incident and the defects of the main transformer could have been detected earlier if EDC had been prudent in its preventive maintenance.

“Power plant outages are events foreseeable and avoidable with necessary and timely preventive maintenance, thus, these events are within management control,” the ERC ruled.

SIPC’s Panay Diesel Power Plant (PDPP) Unit 3, meanwhile, went beyond the 14-day maximum allowable unplanned outage per year for diesel plants. From January 3 to April 25 this year, PDPP’s unplanned outage reached 98 days. It was ordered to pay P4,024,200.

According to SIPC, PDPP Unit 3 has been on unplanned outage since July 23, 2016. In total, it incurred 113 days of unplanned outage.

SIPC said the unplanned outage that continued up to this year was due to the allegedly steep cost of replacing the crankshaft of its PDPP Unit 3, the difficulty of finding a replacement for the said plant part, and the absence of opportunity to justify the repair.

The outage was due to a major damage on its engine. However, the ERC said the prolonged outage was not solely because of the damage, but of SIPC’s clear refusal to repair it, and to instead put it “under preservation.”

“The Commission finds (SIPC) to have failed in giving substantial explanation to warrant its non-liability. The cause of the outage was not force majeure. SIPC had the mandatory obligation to make the repairs but it evidently chose not to do so, resulting in the excess unplanned power outage.

Hence, for lack of a substantial and reasonable explanation, there can be no other result but to find SIPC administratively liable,” the ERC ruled.

The commission earlier said 17 gencos breached their plant outage allowance, causing the unscheduled brownouts from May 31 to June 3 this year.

The ERC is expected to issue similar orders against nine more gencos soon.

“The others, at least three more, are being routed for signature already, while others are still being drafted. There are nine that were deliberated,” said ERC Commissioner Rexie Digal when sought for comment.