Exec explains First Gas choice of alternative fuel

This is in reference to Rudy L. Coronel’s letter titled “Questions for First Gas, Meralco” (Opinion, 12/11/13). Coronel asked some questions related to the First Gas power plants’ switch to an alternative fuel source while natural gas from the Malampaya facility would not be available due to the latter’s periodic maintenance.

It is public knowledge that the Malampaya shutdown, which lasts a few weeks, has to happen approximately every three years. The last three shutdowns occurred in 2007, 2010 and 2013. The shutdown affects three plants—the 1,000-megawatt (MW) Santa Rita plant; the 500-MW San Lorenzo plant; and the 1,200-MW Ilijan plant. The first two plants—Santa Rita and San Lorenzo—are owned and operated by companies within the First Gas group of First Gen Corp., the country’s leading clean and renewable energy company.

During Malampaya’s periodic maintenance, we did not use bunker fuel as our alternative fuel. We also could not use liquefied natural gas (LNG) or store LNG, as Coronel suggested, because the country does not have LNG facilities. In each of those years, Meralco (Manila Electric Co.) requested First Gas to run using liquid fuel which was the cheapest alternative fuel to natural gas based on the least-cost methodology. Under this methodology, Meralco lines up all its available suppliers (hydro, coal, geothermal, oil, etc.) starting from the cheapest. This process aims to limit Meralco’s exposure to the high prices of power supply from the Wholesale Electricity Spot Market (WESM).

As presented by Meralco during the hearing on the power rate hike, which was jointly conducted by the House of Representatives and the Senate last Dec. 10, the increase, attributable to the use of liquid fuel, accounts to about P1.04 per kilowatt-hour (kWh), which is much lower than the P2.38/kWh-increase coming from the WESM. It was also clear from Meralco’s presentation at the congressional hearing that consumers would have ended up paying more if Meralco had chosen not to dispatch the First Gas power plants.

In addition, in procuring for our alternative fuel, we go through a competitive bidding process. This ensures that we get the best quality liquid fuel at the lowest price to run our gas plants.

I hope that this letter helps clarify the matter.

—VICTOR B. SANTOS,

SVP-Regulatory Affairs, First Gen