ERC slaps Php6M in fines on 3 gencos for excessive forced outages


(UPDATED) The Energy Regulatory Commission (ERC) fined three power generation companies (gencos) a total of Php6.03 million, for breaching the maximum allowable unplanned outage days for 2021, specifically covering the period from January 3 to April 25.

Those fined in separate decisions were government-owned Power Sector Assets and Liabilities Management Corporation (PSALM), Lopez-led Energy Development Corporation (EDC), and SPC Island Power Corporation (SIPC) — a unit of SPC Power Corporation. The three gencos are among the 17 that were probed following the Luzon Red Alerts from May 31-June 2.

PSALM was fined Php980,400 for having Unit 2 of the Malaya Thermal Power Plant (MTPP) go on 49 days of unplanned outage, 21.2 days more than the maximum 27.8 days allowed for oil-fired plants.

The state-owned genco argued that “the [Automatic Voltage Regulator (AVR)] of the generator excitation system switching into ‘auto.’” The ERC, however, said the company’s delays in procuring the services of an AVR specialist cannot be justified, even as it was is undergoing privatization negotiations.

PSALM was the owner of the MTPP, located in Pililla, Rizal, during the period of the excessive unplanned outages. The plant’s ownership was transferred to Fort Pilar Energy of businessman-politician Miguel “Mikee” Romero in August after winning the bid in May.

PSALM said it will file a motion for reconsideration.

“Penalizing PSALM would be unfair because the Malaya Plant is actually way past its economic life already and it suffers from continuous deterioration in terms of reliability and efficiency. Malaya was on shutdown long before the red alert and yellow alert,” PSALM President and CEO Atty. Irene Besido-Garcia said in a statement.

The ERC also ordered EDC to pay a Php1,022,400 fine for negligence leading to 22.64 excess days of unplanned outage days for Unit 1 of its Nasulo Geothermal Plant in Valencia, Negros Oriental. Geothermal facilities are only allowed up to 13.7 days in unplanned outages.

EDC said Nasulo’s forced outage was caused by the “activation of the main transformer on land tap changer surge relay” and is beyond management’s control. The commission, however, said this “does not pass muster” and that the genco failed to prove due diligence on its part prior to the unscheduled outages. 

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

Unit 3 of SIPC’s Panay Diesel Power Plant (PDDP) in Dingle, Iloilo, meanwhile, was fined Php4,024,200 for 98 days of unplanned outages, seven times beyond the 14-day annual maximum allowable days for diesel plants.

SIPC explained that the unplanned outage that continued up to this year was due to major damage to its engine.  It further said the allegedly steep cost of replacing the generator’s crankshaft, the difficulty of finding the replacement part, and the absence of opportunity to justify the repair resulted in the excess unplanned power outage.

However, the ERC said that SIPC’s clear refusal to repair the damage makes them administratively liable.

“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,” it said in its decision.