SEVEN electric cooperatives (EC) in Leyte, Cebu and Negros Occidental are disputing the price of electricity sold by Green Core Geothermal Inc. (GCGI). The ECs, through the Association of Electric Cooperatives (Avec), have filed a petition for arbitration with the Energy Regulatory Commission (ERC) to settle the disagreement.
The Power Sector Assets and Liabilities Management Corp. (PSALM) has bid out energy-supply contracts to generators in compliance with the Electricity and Power Industry Reform Act. In the case of the ECs, they were assigned to the Tongonan and Palimpinon plants owned and operated by GCGI.
However, the ECs refuse to sign a power-supply agreement with GCGI due to pricing issues. The cooperatives are Leyte Electric Cooperatives IV and V and Don Orestes Romualdez Electric Cooperative in Leyte; Negros Occidental Electric Cooperative and VMC Rural Electric Cooperative in Negros; and Cebu II Electric Cooperative.
GCGI sells its electricity at P4.7859 per kilowatt-hour (/kWh), claiming it is the lowest rate among all power generators in the Visayas like Panay Energy Development Corp. which sells at P8; Cebu Energy Development Corp., P6; and Kepco-SPC Power Corp., P5.50. But Avec believes GCGI’s offer is still overpriced.
In its petition to ERC, Avec disputes GCGI’s computation in arriving at its offered price based on the following price components: steam cost; plant capacity, capability and cost; annual generated energy; purchase orders (PO); plant refurbishment; weighted average cost of capital (WACC); and operating life.
Avec’s biggest argument is steam price. GCGI buys steam from Energy Development Corp. (EDC) at P2.8328/kWh which Avec sees as too expensive. In contrast, the current steam price for other Leyte geothermal plants ranges from P1.7 to 1.9/kWh.
Avec also cites the Geothermal Resource Sales Contract of Palinpinon I and II facilities between PSALM and Philippine National Oil Co.-EDC covering the period from Aug. 10, 2006 to Oct. 31, 2031 which pegged the base price of steam at P1.50/kWh. Avec believes GCGI can haggle a lower price of steam, with EDC being a sister company.
On plant capacity/capability and cost, Avec avers that while the Tongonan and Palinpinon plants have a combined capacity of 305 megawatts (MW), their current dependable capacity is only 210 MW.
“It appears that GCGI…over-computed the plant cost to be recovered at P10,080,790,425 since it factored in the 95 MW unused capacity,” the petition reads.
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