ERC grants interim relief on SMCPC’s power supply contracts

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The Energy Regulatory Commission (ERC) announced on Thursday that it had granted interim relief to five Mindanao distribution utilities (DUs) and San Miguel Consolidated Power Corporation (SMCPC) in a resolution dated October 25.

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The five separate applications for approval of the Power Supply Contracts (PSCs) that were jointly filed with Cotabato Electric Cooperative (Cotelco), Surigao del Sur II Electric Cooperative (Surseco II), Zamboanga City Electric Cooperative (Zamcelco), Davao del Sur Electric Cooperative (Dasureco), and Agusan del Sur Electric Cooperative (Aselco).

The electricity will be sourced from SMCPC’s 2 x 150 megawatts (MW) Circulating Fluidized Bed (CFB) coal-fired power plant located in Malita, Davao del Sur.

The grant of interim relief will enable SMCPC to obtain financial closing with various lenders as it is now authorized to implement its respective PSCs with the said DUs, although these are still subject to the ERC’s completion of the adjudication process and technical evaluations of the applications.

Under the grant, however, the concerned DUs may already include in the computation of its generation charge the costs incurred for the supply that will be eventually sourced from SMCPC once commercial operations commence.

“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 and CEO Jose Vicente B. Salazar said.

SMCPC’s PSCs covers a period of 10 years and involves a contract capacity of 10 MW for Cotelco; 5 MW for Surseco II; 35 MW for Zamcelco; 10 MW for Dasureco; and 10 MW for Aselco.

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

On the other hand, if the final rate is lower than that granted in the interim, the amount corresponding to the reduction shall be refunded by SMCPC to the concerned DUs.

The 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 (COC), 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.

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