PNG Power has always complied with the Third Party Access Code when engaging Independent Power Producers to supply electricity onto PNG Power’s electricity systems.
PNG Power ensures that Independent Power Producers (IPP) engaged to supply power to our customers provide cheap and reliable power supply before any Power Purchase Agreement (PPA) is signed with them.
We take this opportunity to thank the CEO and Commissioner of the Independent Consumer and Competition Commission (ICCC), Mr Paulus Ain, for bringing the issue of licensing of electrical power producers to light as reported in the newspapers today, and we fully support him and ICCC in their endeavor to regulate the electricity industry.
Section 2.1 (d) of the Third Party Access Code section requires that the PPA first be reviewed and approved by the ICCC before it is signed, therefore, PNG Power does not sign any Power Purchase Agreement without the approval of the ICCC.
The Third Party Access Code states that, before PNG Power and an Independent Power Producer execute a Power Purchase Agreement, PNG Power must demonstrate to the ICCC that the power purchase price is less than or equal to the Power Purchase Reference Price for that particular grid. PNG Power has always complied with that.
Also in line with the PNG Government’s policy on promoting the use of Public/Private Partnerships, where it is clear that the private sector’s packaging of design, construction, financing, operation and maintenance of a generation proposal is commercially and technically viable to PNG Power and that benefit can be passed to our customers in the form of cheaper and more reliable power, PNG Power enters into a Power Purchase Agreement with the Independent Power Producer in compliance with the Third Party Access Code and the Grid Code.
PNG Power’s operation is also subject to a range of legislation including the Electricity Industry Act 2002, the Independent Consumer and Competition Commission Act and, most recently, the Third Party Access Code and Grid Code (implemented in 2014).
These provide the commercial and technical protocols with which PNG Power and any third party who want to either sell power to PNG Power or wheel power to its customer must comply.
The three grids currently covered under the Third Party Access Code and the Grid Code are Port Moresby, Ramu and Gazelle. The Power Purchase Reference Price is determined in accordance with Section 2.4 of the Third Party Access Code and is based on PNG Power’s Development Plan which is updated every two to three years.
PNG Power submitted its last Statement of Power Purchase Reference Price for each of the grids to ICCC in 2014.
The next PNG Power Development Plan is still under review and once it is finalised and approved by the PNG Power Board, this will pave way for the Statement of Power Purchase Reference Price to be updated accordingly this year.
PNG Power supports ICCC in its role as the Regulator and will continue to comply and cooperate with their requirements.
All Power Purchase Agreements that PNG Power has with Independent Power Producers are confidential. Similarly, any discussions and disclosure of Power Purchase Agreements with the ICCC are covered under strict confidentiality provisions.
DOUGLAS MAGEO, Acting CEO, PNG Power Ltd