ERC allows SMCPC to implement supply contracts with 5 DUs

by Lenie LecturaOctober 28, 2016

from Business Mirror

THE Energy Regulatory Commission (ERC) decided to grant interim relief on San Miguel Consolidated Power Corp.’s (SMCPC) power-supply contracts (PSCs) with five distribution utilities (DUs) based in Mindanao.

The grant of an interim relief will allow SMCPC to obtain financial closing with various lenders, as it will be authorized to implement its respective PSCs pending approval from the regulators.

The DUs, in turn, may already include in the computation of their generation charge the costs incurred for the supply that will be eventually sourced from SMCPC’s power plant once commercial operations commence.

SMCPC said this involves the 2- by 150-megawatt (MW) Circulating Fluidized Bed coal-fired power plant located in Malita, Davao del Sur.

SMCPC and the following DUs—Cotabato Electric Cooperative Inc. (Cotelco), Surigao del Sur II Electric Cooperative Inc. (Surseco II), Zamboanga City Electric Cooperative Inc. (Zamcelco), Davao del Sur Electric Cooperative Inc. (Dasureco) and Agusan del Sur Electric Cooperative Inc. (Aselco)—filed separate applications for approval of the PSCs.

SMCPC will supply 10 MW for Cotelco; Surseco II; 35 MW with Zamcelco; 10 MW with Dasureco; and 10 MW with Aselco. All contracts are valid for 10 years.

Based on initial evaluation by the ERC, the proposed rates in the PSCs are lower compared to two comparable plants having the same fuel source and capacity.   In the event the final rate is higher than that of the interim rates granted, the resulting additional charges would be collected by SMCPC from the concerned DUs.

If the final rate is lower than that granted in the interim, the amount corresponding to the reduction would be refunded by SMCPC to the concerned DU.

An interim relief of the PSCs is without prejudice to any findings by the ERC in its evaluation of the proponent’s application for certificate of compliance, which is needed prior to the commencement of commercial operations. A major consideration is that supply contracts provide the most reliable and least cost-generation mix for the benefit of the DUs’ member-consumers, the ERC said.

“The ERC’s decision to grant interim relief to SMCPC pertaining to its PSCs will help augment the deficient supply of power in Mindanao and ensure continuous power supply through the timely delivery of committed new capacities,” ERC Chairman Jose Vicente   Salazar said.