Generation Sector
The generation sector converts fuel and other forms of energy into electricity. It consists of the following: (i) NPC-owned and operated generation facilities; (ii) NPC-owned, which consists of plants operated by Independent Power Producers as well as IPP-owned and-operated plants, all of which supply electricity to NPC; and (iii) IPP-owned and-operated plants that supply electricity to customers other than NPC. Although NPC continues to control ~70% of Luzon’s total generating capacity, recent successes in the privatization process of NPC continue to build up momentum for reforms in the power industry.
Under the Electric Power Industry Reform Act (EPIRA), generation companies are allowed to sell electricity to distribution utilities or to retail electricity suppliers through either bilateral contracts or the Wholesale Electricity Spot Market (WESM) as described below. Once the regime of retail competition and open access is implemented, generation companies may likewise sell electricity to eligible end-users.
Under Section 31 of the EPIRA, implementation of open access is subject to the fulfillment of five conditions, namely: (a) Establishment of the wholesale electricity spot market, (b) Approval of unbundled transmission and distribution wheeling charges, (c) Initial implementation of the cross-subsidy removal scheme, (d) Privatization of at least 70 percent of the total capacity of generating assets of NPC in Luzon and Visayas; and (e) Transfer of the management and control of at least 70 percent of the total energy output of power plants under contract with NPC to the IPP Administrators.
To date, only the transfer of the management and control of at least 70 percent of the total energy output of power plants under contract with NPC to the IPP Administrators is still to be met.
No generation company is allowed to own more than 30 percent of the installed generating capacity of the Luzon, Visayas or Mindanao grids and/or 25 percent of the total nationwide installed generating capacity. Also, no generation company associated with a distribution utility may supply under bilateral contracts more than 50 percent of the distribution utility's total demand, without prejudice to the bilateral contracts entered into prior to the effectivity of the EPIRA.
Historically, the generation sector has been dominated by NPC. To introduce and foster competition in the sector, the EPIRA mandates the total privatization of the generation assets and IPP contracts of NPC, which exclude the assets devoted to missionary electrification through NPC's Small Power Utilities Group. NPC is directed to transfer ownership of all its assets, liabilities and IPP contracts to Power Sector Assets and Liabilities Management Corporation. PSALM is tasked to manage the orderly sale, disposition and privatization of NPC generation assets, real estate and other disposable assets, and IPP contracts with the objective of liquidating all NPC financial obligations and stranded contract costs in an optimal manner.
PSALM has as of July 2009 privatized 13 NPC generation assets with an aggregate rated capacity of 2,772.33 MW, including the 600-MW Masinloc Coal-Fired Thermal Power Plant, the 600-MW Calaca Coal-Fired Thermal Power Plant, the 175-MW Ambuklao-Binga Hydroelectric Power Plant Complex, and the 747-MW Tiwi-Makban Geothermal Power Plant Complex.
Maintaining its focus to get independent power producer administrators (IPPAs) appointed this year, the PSALM Corporation formally opened on 23 July 2009 the second round of bidding for the selection of IPPAs to manage the contracted capacities of the coal-fired Sual and Pagbilao power plants with the publication of the invitation to bid (ITB) in major dailies.
The 1000-megawatt (MW) Sual power plant in Sual, Pangasinan and the 700-MW Pagbilao plant in Pagbilao, Quezon are both operated by Team Energy under build-operate-transfer contracts that will expire in 2024 and 2025, respectively
First Gen's power plants include the following:
Combined Cycle Gas Turbine
Hydroelectric Power Plant
Geothermal Power Plant
Diesel Power Plant
