SMC power unit bags new supply contracts

By Donnabelle L. Gatdula (The Philippine Star) Updated September 27, 2011 12:00 AM


MANILA, Philippines - San Miguel Energy Corp. (SMEC), the power generation arm of highly-diversified conglomerate San Miguel Corp. (SMC), has bagged new power supply contracts.


According to Energy Regulatory Commission (ERC) documents, SMEC has been chosen by Ilocos Norte Electric Cooperative Inc. (INEC) and Sorsogon II Electric Cooperative Inc. (SORECO) to provide power for them.


“Upon evaluation of the offers of various interested suppliers, SMEC’s proposal was considered the most favorable to INEC and its consumer members,” INEC said.


The documents submitted to the ERC showed that SMEC shall supply INEC’s power requirements up to the end of the year at P4.60 per kilowatt-hour, which is lower by around P0.01 per kwh than state-owned National Power Corp.’s rates.


INEC holds the franchise to operate light and power service in the municipalities of Adams, Bacarra, Badoc, Bangui, Banna, Burgos, Carasi, Currimao, Dingras, Dumalneg, Marcos, Nueva Era, Pagudpud, Paoay, Pasuquin, Piddig, Pinili, San Nicolas, Sarrat, Solsona, Vintar, and the cities of Laoag and Batac all in the province of Ilocos Norte.


Meanwhile, SORECO II initially wanted to contract IN2Power Inc. However, the two firms were not able to agree on the proposed contract due to limitations of supply due to El Niño weather phenomenon which affected the operations of its power plant.


“With these developments, after the determination of SORECO II that the offer of SMEC was advantageous to its consumers, the contract was eventually awarded to the latter,” the utility said.


SORECO II, on the other hand, distributes electricity to the municipalities of Bacon, Barcelona, Castilla, Donsol, Gubat, Pilar, Prieto-Diaz, and Sorsogon City in the province of Sorsogon.


Under the supply contract entered into by SORECO II and SMEC, the latter shall supply the distributor’s power requirements up to 2012 at a rate of P5.19 per kwh, higher by 92 centavos per kwh than Napocor’s rates.


In their respective regulatory filing to ERC, it was learned that INEC and SORECO II’s deal with SMEC would include a monthly cost adjustment mechanism to reflect movements in the latter’s power generation cost, particularly in the prices of coal, and foreign currency exchange fluctuations.


It was stressed though that the supply contracts have yet to be approved by the ERC.


SMEC is the independent power producer administration (IPPA) for the capacity covered by the 1,294 megawatt (MW) Sual coal-fired thermal power plant.


The power plant consists of two units, each with an installed capacity of 647 MW located in Sitios Bangayao, Buyog and Pao of Bgy. Pangascasan, Sual, Pangasinan, covering 280 hectares of land area.