al grid, improve and expand transmission facilities, and, subject to technical constraints,
provide the central dispatch of all generation facilities.- The Power Sector Assets and Liabilities Management (PSALM) Corporation will manage
the disposition and privatisation of the NPC’s assets, and the liquidation of its financial
obligations and stranded contract costs (the excess of the contracted cost of electricity
under eligible contracts over the actual selling price of the contracted energy output).
The distribution sector, including Meralco, was essentially left unchanged by the new legis-
lation. Distributors will retain a monopoly on small customers – those with annual usage of
no more than 1 MW, accounting for three quarters of all customers – and a monopoly on
power lines, although it will be required to grant access to rivals at rates determined by the
government.
A new supply sector system subjects sellers of electricity, other than generators and dis-
tributors in their franchised areas, to the authority of the ERC. The law provides for the estab-
lishment of a wholesale electricity spot market within a year, and for retail competition and
open access within three years.
Finally, the new law will end a system of cross-subsidies under which customers in the
Luzon region subsidised those in the Mindanao and Visayas regions and, within the Luzon
region, industrial customers subsidised commercial and residential customers.
Project description
The Quezon Power project consists of a 440 MW baseload, pulverised-coal-fired electric gen-
eration facility, a 31-kilometre, 230 kV double-circuit transmission line and related facilities.
The generation facility is located on a 100-hectare coastal site near the municipality of
Mauban in Quezon province on the island of Luzon, about a four-hour drive southwest of
Manila. The transmission line runs through a 40-metre-wide corridor from the generation
facility to the NPC’s power-grid substation at Tayabas in Quezon province. The generation
facility includes an offshore construction pier, a coal-handling pier, coal-storage and ash-dis-
posal facilities, sewage and wastewater treatment plants, desalinisation equipment, a switch-
yard, housing facilities and an administrative office. It is equipped with semidry flue
scrubbers and an electrostatic precipitator for emissions control, as well as low-nitrous oxide
(NOX) burners. The PPA requires that Meralco receive the generation facility’s electrical out-
put at Tayabas, the point of interconnection with the transmission line, which connects the
generation facility with the NPC’s transmission system. The NPC takes responsibility for
wheeling the power produced from the generation facility to Meralco. The commercial struc-
ture of the project is shown in Exhibit 11.1. Wheeling is the movement of electricity from one
system to another over the transmission facilities of intervening systems. Wheeling is
required to offer customers a choice of electricity suppliers.
Project origins
In 1993 PMR Power, a local developer, reached a preliminary agreement to develop an indepen-
dent power project to sell power to Meralco. PMR Power selected Ogden Energy, Inc. and
Bechtel Enterprises as co-developers in 1994. The three project sponsors worked together to
complete the PPA; structure the technical, commercial and financial aspects of the project; and
QUEZON POWER, THE PHILIPPINES