Nick in Manila

"Keeping perspective: The daily data I had at hand from WESM Weekly Reports goes back to just Jan-2011 and that is what is reflected in the post above. But to keep things in perspective, here is a plot of WESM monthly average data going back to Jan-2010. 2010 was an El Niño year with shortages. https://img.skitch.com/2012052... The longer term 28-month trend shown is DOWN, not up. It's the shorter term trend we see in the post that has turned upward. The shorter-term, 17 month rate of increase in prices vs rate of increase in load still isn't likely sustainable in long-term, so don't expect it anymore than one should expect the 28 month longer term trend to continue downward. Things will be cyclical. And the long term trend, say 15 years, is unknowable. It could very well be downward, or upward and depends greatly on cost of new technologies and fuels. We can only monitor these trends on differing time scales." - Nick in Manila

"The ERC actually consolidated eight different filings in the GRAM Decision. The first of those filings was made by NPC in 2008. I don't know why this took so long." - Nick in Manila

"Well the April Luzon rate for NPC is at P5.71/kWh. That may very well be higher than certain PSAs. Meralco has filed four new PSAs with the ERC and you can find those filings on the ERC website. Those filings contain a "sample calculation" for the February billing month and each of those four sample calculations are below the P5.71 level. [disclosure: Meralco is a client] The March "Selling Rate" for WESM was P5.41 - but that's a volatile animal. However, interestingly, the trailing 12-month average for the WESM Selling Rate is also P5.4. The ERC ratemaking scheme for NPC does appear to be more of less fair to me - although I agree there are several ways to execute fairness in ratemaking. It's the ERC's job to weigh all those and determine "fair." I guess it's always a debatable issue. But fundamentally, cost recovery - which is what the ERC aims for with NPC, is appropriate for a government owned entity. What is disappointing is that cost-recovery rates were not in place during all..." - Nick in Manila

"Cesbayan - The Conal-SOCOTECO II Agreement would be an important step to getting this particular coal-fired plant built as it would help provide the financial security the financiers would need to move forward with construction and operation.  The ERC will be reviewing the appropriateness of both the details and overall impact of this Agreement on the SOCOTECO II ratepayers.   If there are particular aspects that I could help put into "layman's" terms for you, I will be happy  to try." - Nick in Manila

"I totally agree with you. I would have fully expected that only TPEC had control of offering bids into WESM, even if they handed that over to SMEC as agent. Apparently not the case." - Nick in Manila

"Yes. SMEC (the IPP Administrator) has a bilateral IPPA agreement with TPEC (owner/operator of Sual) which gives SMEC the right to market and sell 1,000 MW of power from Sual." - Nick in Manila

"I now see that ERC has recently posted a Decision that helps clarify the issue for me.  http://www.erc.gov.ph/cgi-bin/... is not about hedging the uncontracted capacity. It is about who controls the WESM bidding (and how) when their are joint-owners (owner is probably not the correct term, but it's used in the Decision) in the physical output of a single generating unit.The issue is appropriately winding its way through the regulatory process, as it should. Hopefully, we'll find out how this particular case sets a precedent for future such cases in our Philippine markets." - Nick in Manila

"I want to make clear that I have't seen the contract. My comments are based solely on my reading of the Applicant's petition contained in the link above. Further to the 100% Capacity Factor issue: LEYECO III must nominate 2.5 MW each and every hour of the year, but GCGI gets to designate up to 1,440 hour per year as "maintenance allowance." So only energy associated with an annual capacity factor as low 83.6% might be available at the Contract price. Language in petition isn't totally definitive on this point, but my reading is that "replacement energy" (for the maintenance allowance) must be procured from and supplied by GCGI (to the extent available to CGCI) at a prices equivalent to the replacement energy cost, but no lower than the Contract price. So if GCGI replaces energy at P3/kWh, they still bill at Contract price of P5.1/kWh escalated. I could be wrong about that. My observation is that that is not an uncommon provision in Philippine bilaterals and is neither good nor bad -..." - Nick in Manila

"Ha. I have no idea how the MO takes 8.3.3.2 (e) into consideration. To the best of my knowledge it is not a direct factor in determining the hourly schedules. But someone closer to the PEMC mechanisms than I would be in a better position to answer your question. If I'm incorrect, I'd like to know about it." - Nick in Manila

"Yes. I know. I've got image problems here on Tumblr." - Nick in Manila

"I'm going to have to qualify that position I just laid out. It applies only in the absence of anti-competitive price manipulation by merchant IPPs. If an IPP is fully hedged through a bilateral, its profits in the WESM market are capped. Past a certain point, as prices rise, the IPP gets no benefit and all the benefit of the hedge flows to the off-taker. In such case, there is no incentive for an IPP to manipulate market-clearing prices because it cannot benefit from that activity.However, it the IPP is merchant (or has an unhedged component), there can potentially be an incentive to manipulate market-clearing prices upward through anti-competitive behavior since the merchant can benefit from that.The presence of merchant IPPs in the market doesn't mean that prices necessarily WILL be manipulated. And if they are not, if the merchants are just profit-maximizing but within the bounds of allowed competitive behavior, then my point holds: - bilaterals don't affect price." - Nick in Manila

"Oh, your question never got completed. It looked like it was going to be a good one though. But let me anticipate where you might have been headed:  My position is that the bidding behavior of an IPP into the WESM is unaffected by the presence or absence of any bilateral it may have in place, if the IPP is profit-maximizing. So if all IPPs are profit-maximizing, WESM prices are unaffected by bilateral contracts, or the lack thereof.  Although the lack of a bilateral may influence whether an IPP departs the market. That's a bit of a different issue, but it would affect prices." - Nick in Manila

"Congrats Robert. Hey we never had that coffee. Now I've moved CDROM Malumanay. But not too far away - on Mapang-akit." - Nick in Manila

"Harumpf. This smells of economic rent seeking by certain incumbents trying to stave off disintermediation." - Nick in Manila

"Yeah, I'm still trying to scratch out a living. I'm not yet retired." - Nick in Manila

"Bill - Well it turns out my niece mis-located Damulog for me - it's about 15 km further south from Dangcagan than I thought. So these guys may or may not be classmates. But they're close!" - Nick in Manila

"Hi Bill. First I want to thank you for writing this up. I appreciated getting to hear about your experiences. I'm living in Cagayan de Oro. Two of my wife's nieces from Dangacagan have just moved up with us this summer so they can attend school in CdO this upcoming school year that starts tomorrow. So I asked my niece, Maling Delatorre, if she knew where Damulog is and show her your post. Well she immediately recognized your wife as the older sister of her classmate. How amazing? So I fire up Google Earth, zoom into Dangcagan and she starts jumping up and down with excitement when she recognized her house. Fortunately Google Earth has recent high resolution imagery in that area. And it turns out Damulog is just down the road form their house. We have a small place in Malaybalay that we're fixing back up so we can use it as a weekend getaway and we plan to do that most weekends now. So if you're ever traveling up our way or to CdO and have time to look me up, please do so. Text me at..." - Nick in Manila