NEA asks ERC to intervene in supply over-contracting by electric coops

By Alena Mae S. Flores – June 26, 2023, 6:10 pm
from manilastandard.net

State-run National Electrification Administration asked the Energy Regulatory Commission to intervene in cases of over-contracting of supply by electric cooperatives.

NEA administrator Antonio Mariano Almeda requested ERC chairperson Monalisa Dimalanta to act within its authority for the possible reduction of contracted power supply through amendment or cancellation of the agreements with the concerned power suppliers.

Based on the ERC’s previous observation, most PSAs include a take or pay provision which shows that with or without sourcing of power from the contracted generating company, the DU or the EC should pay a cost that would be passed on to consumers.

If a DU engages so many power suppliers unnecessarily, the ERC said it would cause an upward adjustment on the DUs blended generation rate charged to consumers.

Almeda’s concern was raised during the consultative meeting between the ERC, the Department of Energy and the ECs on the policy issues regarding power supply agreements, including ECs that need emergency supply.

The meeting was held on June 16 to resolve conflicting interpretations on policies involving the emergency power supply agreement procurement.

An ERC advisory issued on June 7 states that EPSAs should be immediately implemented and filed with the regulator.

It said the latest lowest approved generation tariff for the same technology in comparable areas as posted in the ERC website would be the applicable rate which could be passed through to consumers while the EPSA is still pending approval.

Once the ERC evaluated and approved the EPSA, the definitive price issued would be the one passed on to consumers.

ECs can also negotiate a higher or lower tariff than the ERC-approved tariff for each technology available in the area against the EPSA rate, provided that it can be proven to the ERC that it is the least competitive rate or will benefit consumers.

ERC chairperson Monalisa Dimalanta said that if there is no similar technology available in the area, ECs should refer to the nearby or surrounding regions with the same specific technology.

She said the ERC would then decide if it is the same technology and give approval for the rates.

The ECs raised concern on the approval timeframe of the EPSA which may have adverse impact on the cash flow once adjustment will be effected.

Almeda said ECs can request the Philippine Independent Power Producers Association Inc. to allow breathing space for the ECs and not charge interest for the purpose.

Almesa said ECs could also inquire from Land Bank of the Philippines for a working capital loan to cover the difference between the latest ERC-approved rate and the actual EPSA rate.

The NEA and the ERC will draft a standardized template for EPSA applications to mitigate the longer periods of review.

Meanwhile, all ECs affected by the Supreme Court decision on Alyansa Para sa Bagong Pilipinas, Inc. (ABP),  et al., vs ERC, et al. (G.R. No.: 2276703 May 2019); those operating under ineligible power supply contracts as determined by ERC; or experiencing a deficit in the power supply requirement while  undergoing the competitive selection process or under an emergency situation, may accept EPSA  offers from the gencos, including those they previously had contracts with,  provided they offer the lowest rate.

Ineligible power supply contracts or those power supply agreements entered into by the ECs with the power supplier but were not approved by the ERC, shall have the National Power Corp.-Time of Use as applicable rates.