ERC okays power deal between SMEC, Tarelco

by Lenie Lectura – November 19, 2015

from Business Mirror

THE Energy Regulatory Commission (ERC) has given the green light to implement a temporary power-supply contract between Tarlac II Electric Cooperative Inc. (Tarelco II) and San Miguel Energy Corp. (SMEC).

In its 24-page decision, the regulator “provisionally approves the Interim Supply Contract [ISC]” between the two companies as this will “redound to the benefit of Tarelco II’s member-consumers in terms of reliable, continuous and efficient supply of power within its franchise area at reasonable costs as mandated by the Electric Power Industry Reform Act of 2001, or Epira.” Tarelco II distributes power in the municipalities of Bamban, Capas, Conpcecion and La Paz, all in the province of Tarlac, and the municipality of Zaragoza in the province of Nueva Ecija.

SMEC, meanwhile, is the independent power- producer administrator of the 1,000-megawatt (MW) net capacity of the Sual coal-fired power plant in Pangasinan.

The ISC states that implementation will take effect until commercial operations date of the 2×150-MW coal-fired power plant of SMEC in Limay, Bataan.

“Tarelco II must source power from SMEC to avoid power outage in its franchise area…. Tarelco II is undergoing a significant increase and is expecting a further increase in its energy requirements due to a growth in the total demand of its member-consumers,” Tarelco II said.

“Without the supply of SMEC, Tarelco II will be exposed to the unpredictable and expectedly higher prices in the WESM [Wholesale Electricity Spot Market] or worse, be unable to supply the required energy to its franchise area resulting in total blackout,” SMEC said.

Both said there is a necessity for the immediate and provisional approval of their application in order that there will be no undue disruption in the power supply to Tarelco II member-consumers.

“The commission has a mandate to protect the interest of the electricity consumers insofar as they are affected by the rates, by ensuring that the tariffs are consistent with the principle of full recovery of prudent and reasonable costs,” the ERC said in its decision.