San Miguel unit receives ERC nod to supply electricity in Cagayan

San Miguel Energy Corp. secured the regulator’s approval to supply power to an electric cooperative, helping ensure for the moment adequate and affordable supply in the Cagayan province.

In an order, the Energy Regulatory Commission (ERC) granted a provisional approval for the interim power supply agreement between Cagayan I Electric Cooperative Inc. (Cagelco I) and San Miguel Energy.

The ERC noted that an initial evaluation of the application showed that the agreement would “redound to the benefit of Cagelco I’s consumers in terms of continuous, reliable, efficient and affordable power supply as mandated by the Electric Power Industry Reform Act (Epira).”

The offer of San Miguel Energy was reported to be the “most compliant,” having met the power supply requirements of Cagelco I up to Dec. 25, 2012, during which the interim agreement between the two parties will expire.

Also, a simulation showed that the blended generation rate of Cagelco I, if it were to include the supply from San Miguel Energy, would result in a reduction of rates by around 27 centavos per kilowatt-hour.

San Miguel Energy will be providing power to Cagelco from the 1,294-megawatt Sual coal-fired power plant in Pangasinan.

The power firm is currently the independent power producer administrator (Ippa) of the Sual facility, which means that it is responsible for the management of the power plant’s contracted capacities and fuel supply.

Cagelco I needs the additional supply from San Miguel Energy while it waits for GNPower Ltd. Co. to start operating its 600-MW coal-fired power plant in Mariveles, Bataan.

According to the ERC order, Cagelco I has an existing 15-year power supply agreement with GNPower that was already approved back in October 2007. GNPower was supposed to start operations last January, but unforeseen delays forced the power company to reset commercial operations to a later date.