Talks vital to settle power rate

By PETER ESILA
MORE consultations on power purchase between PNG Power Ltd (PPL), independent power producers (IPP) and stakeholders are necessary to settle on an agreed rate, an official says.
National Energy Authority chairman Joseph Gabut said the main issue about rates for consumers was the reference price agreed at power purchase agreement (PPA) negotiations. Abau MP Sir Puka Temu suggested to State Enterprises Minister William Duma in Parliament last week that a review needed to be done to address the sale of power to PPL by IPPs at a time when the State-owned entity was struggling.
He said this in reference to comments by IP3 (PNG IPP Industry Group) chairman David Burbidge who had earlier said: “All I can do is reiterate that we are working with PPL to resolve this issue. It’s a difficult time for the industry and we hope for a solution that meets all parties’ needs.”
Gabut said in Port Moresby the reference price was set based on hydro power.
He added that in Lae, the reference price was supposed to based on hydro as well but it was not.
“I do not know what energy source serves as the reference or bench mark price,” Gabut said.
“From an agreement reached at PPA negotiations between PPL and an IPP a reference price can be determined.
“Consequently, PPL decides on the sale price for industrial, commercial and domestic consumers.
“The consumer price is determined by the criteria set by PPL and reference price is determined by negotiations between PPL and IPPs.”
Gabut said a policy review could result in a new range within which PPA negotiations were allowed and not beyond the ceiling price or below the floor price for the sale of power from IPPs.
“Another mechanism for dealing with price of whole sale power from generation companies is for the regulator to conduct auctions and the lowest bidder is selected to sell power to PPL.”
Gabut said it was necessary for consultations to be held among stakeholders with Government to reach at an appropriate solution.