These are the 1,200-MW Ilijan natural gas combined cycle project; 1,000-MW Sual coal thermal units 1&2; 630-MW Malaya oil thermal units 1&2; 700-MW Pagbilao coal thermal units 1&2; 215-MW Bauang diesel plant; 116-MW Subic diesel plant; 140-MW Casecnan multi-purpose hydro project; 728-MW Caliraya-Botocan-Kalayaan pump storage facility; 340-MW San Roque multi-purpose hydro power project; 70-MW Bakun hydro plant; and the 440-MW Leyte B geothermal power project.
Documents obtained from PSALM indicated that it remains a target for it to bid out contracts for the IPPAs by January 2006; and the contracts to selected parties be awarded around May.
During the Trial Operations Program (TOP) for the Wholesale Electricity Spot Market (WESM) in Luzon, the transferee-company of the National Power Corporation (NPC) already experimented on how it can segregate the assets into four clusters and let them compete with each other in the power trading pool.
The IPP portfolio has been lumped together with the NPC-owned assets during the said trail run.
Put together in Cluster 1 are the Ilijan and Casecnan plants along with the 600-MW Masinloc coal-fired facility and the 130-MW Bacon-Manito geothermal facility; while those in Cluster 2 are the Pagbilao plant; 290-MW and 340-MW Malaya 1 and 2; San Roque; 600-MW Limay combined cycle facility; 218-MW Angat and 100-MW hydro power plants.
Cluster 3, on the other hand, covered the Leyte-B geothermal project; Subic diesel and CBK hydro plants; 12-MW Masiway and 100-MW Pantabangan hydro plants; 100-MW Navotas gas turbine; 360-MW Magat and 220-MW Tiwi power facility; and included in Cluster 4 are the Sual, Buang and Bakun plants, together with 63-MW Magellan, 450-MW Calaca and 300-MW Makiling-Banahaw assets.
It would be noted that the privatization of at least 70 percent of the IPP contracts is among the preconditions set out under the Electric Power Industry Reform Act (EPIRA) before the industry could move forward into the implementation of open access.
Within the sphere of trading in the electricity spot market, it was explained that the IPPAs will handle transactions for the NPC-contracted IPPs, primarily in the bidding for their capacities. As prescribed by law, PSALM noted that it will engage IPPAs through a competitive bidding process.
The EPIRA has mandated that the privatization of the IPP contracts shall be done by contracting out the management of the offtake obligations of PSALM, as transferred from NPC.
To be tapped as IPPAs, aside from energy firms could be the newly-formed energy traders, which are offshoots of financial or energy consultancy firms, and even former employees of the NPC, as long as they could satisfy the stringent financial terms set.
In choosing the administrators of the IPP contracts, certain criteria have already been laid down by PSALM.
Candidates are required to demonstrate financial integrity through a scrutiny of their net worth, bank references, and performance bond, among others.
The prospective IPPAs would also be asked to have first-hand experience as an electricity trader in a competitive wholesale market or other demonstration of competence, so they would have a way of justifying their approach to bidding the IPP contracts into the electricity pool market.
Primarily, the role of the IPPAs would be to bid the IPP’s energy output into the WESM in a manner which optimizes its running hours and net revenues taking account of the cost and price structure in the contract and expected patterns of behavior in the market; and to negotiate bilateral contracts with customers and/or to sell options, including financial instruments, or insurance capacity.
