Trail of Power Mess Leads to Ramos

Name of Plant :	63 MW Cavite EPZA Diesel Power Plant (A17)
Name of IPP :	Magellan Cogeneration Inc, (MCI)/Covanta Energy Philippines Holdings, Inc.
Contract Type :	Build-Operate-Own/Energy Conversion Agreement/Solicited
Status of Plant :	Operational
Cooperation Period :	10 years (December 1995 - December 2005)

Nature of Issue	Issue	Recommendation
Approval Process and Validity of the ECA Amendment	MCI availed of the NPC's One Day Power Sales Program in April 2000 through a Memorandum of Agreement (MOA). The MOA (ODPS contract) impliedly amends the NPC-MCI ECA by redefining the power supply and delivery obligations of NPC and MCI in the ECA and adjusting the Net Contracted Capacity and guaranteeing NPC's full availability fees to MCI despite failure to meet minimum energy requirements.	DOJ to review� MCA, which impliedly amends the NPC-MCI ECA and to establish whether there is ground to terminate the ECA at that point.
MCI�s ODPS Availment	While the MOA extension for MCI's availment ends last March 2002, MCI still continues to avail of the ODPS. On 10 May 2002 NPC suspended MCI's availment of ODPS, As provided in the MOAIODPS contract, the NPC-MCI Energy Conversion Agreement and Fuel Management Agreement will automatically govern relationship between NPC and CI. With the ODPS suspension, MCI has to rely on its own generation to supply the power requirements of CEPZ.	Further capability and reliability testing should be conducted for the Power Plant to determine the net contracted capacity as basis for the computation of the guaranteed energy generation since the last testing was conducted in January 2001.

	The ODPS market targeted customers with either self-generating units or purchase their power requirements from their own IPPs. MCI is the only NPC-IPP availing of the ODPS. Within this framework, MCI's availment of ODPS is difficult to justify. MCI is a generation utility, an IPP with outstanding obligations to both NPC and PEZA to generate electricity.	It is recommended.that MCI's accreditation should be revisited based on the conditions imposed under the amended Implementing Rules and Regulations of ODPS and its implication to the contractual relationship between NPC and MCI.