ERC: CamNorte co-op can get power from Aboitiz

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WEDNESDAY, 04 JULY 2012 20:12 PAUL ANTHONY A. ISLA / REPORTER

THE Energy Regulatory Commission (ERC) said on Wednesday it provisionally approved the power supply agreement (PSA) between the Camarines Norte Electric Cooperative (Canoreco) and Aboitiz Power Renewables Inc. (Apri).

In its order, the ERC said it provisionally sets the generation costs of Apri to Canoreco at an average of P4.5881 per kilowatt-hour (kWh), adding the final generation costs that can be recovered shall be determined by the ERC in its final decision.

The ERC said in the event the rates provisionally approved are found to be higher than the final rates, the amount corresponding to the excess shall be refunded by Canoreco to its customers by crediting the same in their electric bill over a period to be determined by the Commission.

The ERC said Apri shall provide around 120 megawatts (MW) of electricity to Canoreco for 10 years from December 26, 2011 to December 25, 2021.

The agency said Apri will source the electricity it will sell to Canoreco from its 462-MW Tiwi-Makban geothermal power plant complex.

The ERC said Apri initially proposed an average rate of P6.8492/kWh, which accounts for the true cost of generation as well as cost of other market forces such as competition with other independent power producers. The ERC said Apri indicated its proposed rate to Canoreco of P6.8492/kWh is lower than its actual cost of generation of P8.1731/kWh.

The ERC said Apri also alleged it needs extensive rehabilitation to bring the condition of the plant to the level of prudent industry practice and that major repair expenditure is one of its obligations under the asset purchase agreement with the Power Sector Assets and Liabilities Management Corp. (PSALM).

The ERC said it agrees that the rehabilitation cost is an eligible cost to be recovered and therefore included as part of the cost of recovery fee.

“However, the Commission does not agree with the entire amount of P7.21 billion as it is a forecasted capital expenditure that may or may not materialize. The Commission believes only the amount of P1.58 billion should be considered as this has been thoroughly validated using Apri’s 2009 and 2010 audited financial statements,” the ERC said.

Apri won the competitive bid conducted by Psalm for the sale of the Tiwi-Makban geothermal facilities on July 30, 2008. The Tiwi-Makban geothermal facilities have a sustainable capacity of approximately 462 MW.

Apri said the complex is composed of the 289-MW Tiwi plants in Albay and the 458-MW Makban facilities in Laguna and Batangas collectively referred to as the Tiwi-Makban geothermal facilities    source
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