TWelve electric cooperatives in Central Luzon aggregated their total power demand of 300 megawatts, auctioned it off and contracted the winning supplier for 20 years starting 2019, according to the Philippine Chamber of Commerce and Industry (PCCI).
“The day when small electric cooperatives (ECs) will gain the upperhand in negotiating with large power generating companies (gencos) for lower rates for power supply is near,” Alfredo Yao, president of the country’s biggest electric co-op organization, said.
The electric cooperatives estimated that they would lower the cost of purchasing power by about 31 per cent to P3.7022 per kilowatt hour, including purchases from the Wholesale Electricity Spot Market (WESM), Yao said.
“When electric cooperatives in the regions act like mini-Davids, they empower themselves and the consumers to overwhelm the Goliaths,” said Yao. “All would benefit from the social and economic impact of stable power rates over the long term.”
As a result, retail rates to residential, consumer and industrial customers could slide down by 23 per cent from the 2013 average of P7.91 per KWH to P67.09 per kwh.
The electric cooperatives banded together as the Central Luzon Electric Cooperatives Association – First Luzon Aggregation Group (CLECAFLAG). It is headed by Reynaldo Villanueva, president of the Nueva Ecija II Electric Cooperative Area II and Area 2.
Yao expressed confidence that other regional electric cooperatives would adopt the CLECAFLAG precedence. The forecast was shared by Energy Secretary Jericho Petilla, who witnessed the signing of the long-term power supply contract between CLECAFLAG and GN Power, Ltd. Co.
Yao said that the PCCI board discussed the impact of the power aggregation scheme, supported a move to make chamber members that are electric cooperatives aware of the arrangements and the benefits of power demand aggregation, and include the power-supply scheme in the forthcoming 40th Philippine Business Conference.
The 20-year supply contract was signed last June 10, 2014, with GN Power Ltd, Co., an American independent power producer now completing its USD 2.1-billion, 1,200-MW to serve the Luzon power grid.
The ECs could start purchasing in 2018 even while the GN Power plant is undergoing reliability testing.
Also witnessing the signing were, Denise Rollins, acting assistant administrator of the US Agency for International Development (USAID); Edita Bueno, administrator of the National Electrification Administration; Gloria Steele, director of the USAID Philippine mission; Dr. Enrico L. L. Basilio, USAID COMPETE project chief of party, EC board presidents and mangers of GN Power; and engineer Wali del Mundo, USAID COMPETE lead technical adviser to CLECAFLAG.
In mid-2013, the USAID, through its COMPETE project, provided technical assistance to CLECAFLAG.
The 12 cooperatives are the Aurora Electric Cooperative, Inc., Nueva Ecija I Electric Cooperative, Nueva Ecija II Area 1 Electric Cooperative, Nueva Ecija II Area 2 Electric Cooperative, Pampanga I Electric Cooperative, Pampanga II Electric Cooperative, Pampanga III Electric Cooperative, Pampanga Rural Electric Service Cooperative, Tarlac I Electric Cooperative, Tarlac II Electric Cooperative, Zambales I Electric Cooperative, and Zambales II Electric Cooperative.
In August 21, 2013, CLECAFLAG invited six pre-qualified gencos to bid for a power purchase and sales agreement. Three submitted bids. GN Power submitted the lowest rate.
A Swiss challenge was held but the second lowest bidder could not submit a proposal lower than GN Power’s.