ERC sets hearing for amended PSALM supply contracts

by Myrna Velasco, 03 April 2015
from Manila Bulletin

The Energy Regulatory Commission (ERC) is scheduling on April 21 this year the jurisdictional and evidentiary hearing on the amended and extended contracts for the supply of electric energy (CSEE) that Power Sector Assets and Liabilities Management Corporation (PSALM) has entered into with 18 electric cooperatives and distribution utilities in the Visayas grid.

The power contracts’ extension had been on account of the delays in the privatization of the Unified Leyte geothermal power facility via the appointment of independent power producer administrators or IPPAs.

The 18 Visayas power utilities covered in the CSEE include: Antique Electric Cooperative, Biliran Electric Cooperative, Cebu I and II Electric Cooperatives, Central Negros Electric Cooperative, Don Orestes Romualdez Electric Cooperative, Eastern Samar Electric Cooperative, Iloilo II and III Electric Cooperatives, Leyte III and V Electric Cooperatives, Negros Occidental Electric Cooperative, Negros Oriental I Electric Cooperative, Northern Samar Electric Cooperative, Samar I and II Electric Cooperatives and VMC Rural Electric Cooperative.

It was noted that the specified CSEEs, which have durations from December 26, 2013 to December 25, 2014 were executed based on the templates previously approved by the ERC.

Further, it was propounded that the supply deals shall remain in full force and effect “from 26 December 2013 to 25 December 2014 or upon the turn-over date to the winning bidder for the administration of the contracted energy of the Unified Leyte geothermal power plant.”

It has to be reckoned that PSALM had just recently issued anew the tender notice for the IPPA selection for the bulk energy of the Leyte geothermal plant.

The ‘strips offer’ on the plant’s capacity had already been consummated, but the IPPA appointment for its bulk energy will be crucial because that entity will be in charge of trading all of their IPPA-cornered capacities in the Wholesale Electricity Spot Market.

The ERC has noted that there had been several revisions set in PSALM’s supply contracts with the Visayas grid ECs, anchored mainly on the highly-anticipated privatization of the Leyte facility.

These include the basic energy charge to be applied to indirect and direct WESM participants, the contract duration on power capacity; and the nomination terms for contracted energy.

PSALM has noted that “the continued operation of the distribution utilities is indispensable to the economic efficiency of the franchise area they service.”

It added that “in order for these DUs to continue lawfully drawing electricity from the grid, it is imperative that they enter into agreement with PSALM as supplier for the supply of electricity.”

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