Cagayan De Oro’s Cepalco sees lower rates with new RE power

Business Mirror
02 Jun 2014 Written by Butch D. Enerio / Correspondent

CAGAYAN DE ORO CITY—The Cagayan Electric Power and Light Co. (Cepalco) projected that its rates would go down due to lower generation cost from its embedded renewable power plants.

Richard S. Ratunil, Cepalco energy compliance officer, said during a recent briefing with energy stakeholders at a local hotel here that Cepalco as a distribution utility has filed four rate applications with the Energy Regulatory Commission that when approved, would in effect reduce its average distribution charges.

Cepalco—serving this city’s 69 barangays and the municipalities of Tagoloan, Villanueva and Jasaan in Misamis Oriental—said the lowered rate will be applicable for the period July 2014 to June 2015 as prescribed in the Rules in Setting Distribution Wheeling Rates.

“This means that in 2015, the last year of the third regulatory reset of Cepalco, it would reduce its maximum average price from P1.2014 per kilowatt-hour (kWh) in 2014 to P1.1406 in 2015 for a 5-percent reduction of P0.0608 per kWh,” Ratunil said.

He said once approved, this would reduce electric rates across the franchise area—streetlight, P0.070; residential, P0.13; commercial, P0.12; industrial, P0.07; and bulk power, P0.06.

The rate applications cover Cepalco’s power-supply agreements with the three of its embedded power generators.

Embedded generators are power plants located within a distribution utility’s franchise area which supply power directly to it without passing through the transmission network of the National Grid Corp. of the Philippines.

Cepalco’s embedded power plants include Kirahon Solar Energy Corp., a 10-megawatt (MW) solar PV power plant in Kirahon, Villanueva, Misamis Oriental, which would start commercial operations by the first quarter of 2015; the Bubunawan Power Corp., a 7-MW hydroelectric power plant in Baungon, Bukidnon; and the Minergy Energy Systems for its 8-MW Cabulig hydropower plant in Claveria, also in Misamis Oriental.

“The rate impact of the three renewable-energy projects is +P0.06 per kWh but will lover the generation cost in the entire Cepalco franchise area since it would displace our more expensive Minergy Bunker C plant and reduce total generation cost from P4.3015 per kWh to 4.1853 or a reduction of 0.1162 per kWh,” said William U. Lim, senior vice president, Minergy Energy Systems.

Lim said the adjustment of the Capital Recovery Cost based on actual project cost is allowed under ERC approved PSA of Cepalco with Minergy.

Ratunil said Cepalco has been experiencing an unprecedented 5- percent average load growth for the past 10 years. Should this continue, the distribution utility would need an additional power supply of 101 MW over what it now has to accommodate new customers.

Peak load within Cepalco’s franchise area is expected to double from 141 MW in 2013 to 281 MW in 2018 and it is now scouting for additional power supply next year.

Among the options now being evaluated are the coal-fired power plant of Therma South Inc. in Davao City, the DOE’s modular genset program, the suspended Interim Mindanao Electricity Market and Kirahon Solar Energy Corp.

“We want to take care of the energy requirements of our service area especially, considering the growth is really that fast,” said Marilyn A. Chaves, senior manager for customer and community relations.

Chaves said Cepalco is also working on a power-supply agreement with Therma South Inc. and also sourcing from its sister company Minergy Kirahon Solar Plant.

“Hopefully, the 10 MW will be available by early next year, plus Cabulig. We are making sure in the next few years we can supply the needs of our service areas,” Chaves said.

In July 2011 Cepalco cut its power rates by an average of 5 centavos per kilowatt-hour and has continued to reduce it until 2014 for a cumulative total of 20-centavo cut per kilowatt-hour over four years.

The cut is equivalent to a P10 reduction in the monthly power bill of the average 200 kilowatt-hour consumer household starting July 2011, P20 in 2012, P30 in 2013 and P40 in 2014. source