SMC saves ALECO customers from power disconnection

By Myrna M. Velasco – December 29, 2022, 2:51 PM
from Manila Bulletin

The timely intervention of the energy investment unit of San Miguel Corporation (SMC) by providing an “emergency power supply” to Albay Electric Cooperative (ALECO) has prevented the cooperative and its customers from grid and power supply disconnection for the next 12 months, at least.

In a statement to the media, SMC President Ramon S. Ang narrated that government-run National Electrification Administration (NEA) sought the help of the conglomerate “to prevent ALECO’s imminent disconnection from the grid” following a failure to secure emergency power supply contracts with other firms, due to the cooperative’s credit issues.

Ang indicated that one of SMC’s power generation subsidiaries – Masinloc Power Partners Co. Ltd (MPPCL) – have agreed to supply the requirements of ALECO within the specified one-year stretch from its 1,000-megawatt Masinloc coal-fired power facility in Zambales.

The emergency power supply agreement (EPSA), which had been set with a price cap of P10 per kilowatt hour (kWh), was signed between SMC, ALECO and NEA on December 29 this year.

Beyond the initial 12-month duration, it was stipulated that the supply deal will allow for “further reduction in the monthly tariff for the remainder of the term.”

Notably, the debt-ridden Albay power utility had been incessantly threatened to be served with service cut-off, primarily after the massive capacity purchases it has been incurring from the Wholesale Electricity Spot Market (WESM), despite its blighted credit worthiness.

WESM operator Independent Electricity Market Operator of the Philippines (IEMOP), in particular, opted to seek “credit support” for the power supply procurements of ALECO. WESM’s move signals probability that the electric cooperative can no longer source capacity from the spot market for a longer duration.

Nevertheless, Ang noted that the power supply committed from the SMC energy firm would “enable ALECO to prevent any further credit concerns with IEMOP, which could compromise energy security in the area.”

The SMC chief executive emphasized that the power supply deal “is primarily in consideration of the welfare of the people of Albay, who would have otherwise been disconnected from the grid.”

He qualified that “while SMGP (SMC Global Power Holdings Corp.) has pending legal issues with ALECO which we are pursuing, we are still very much concerned about the welfare of the people of Albay.” SMGP is the main corporate vehicle housing all the energy assets of the San Miguel group.

Specifically, ALECO has an ongoing legal skirmish with SMGP subsidiary Albay Power Energy Corp. (APEC), on unpaid claims and advances amounting to P5 billion in relation to their terminated concession agreement.

With the temporary fix, NEA Administrator Antonio Mariano C. Almeda has acknowledged SMC’s gesture of “rescuing” the consumers in the area, “by committing to provide it power supply for the next year.”

He underscored that since the agency became involved in sorting out solutions for that particular dilemma, “our goal was always to ensure continuous power supply to ALECO customers, despite the cooperative’s troubles.”

Almeda conveyed that “while no emergency power contracts could be finalized with the other generation firms, SMC and RSA did not hesitate to help when we approached them.”

Onward, he stated that NEA “will continue to work with all stakeholders to help make this supply agreement work for the benefit of consumers.”