DMCI unit to build diesel power plant in Mindoro

MANILA, Philippines–The power arm of Consunji-led DMCI Holdings Inc. is building a P1.15-billion, 15-megawatt (MW) diesel-fired power plant in Mindoro.

The Energy Regulatory Commission approved the application filed by DMCI Power Corp. (DPC) and Oriental Mindoro Electric Cooperative Inc. (Ormeco) on an electricity supply agreement or ESA involving the diesel power project. However, the ERC approved a lower project cost than the one applied for.

Based on the proposed tariff structure, Ormeco will pay DPC a fixed operations and maintenance fee of P0.519 per kWh and a variable fee of P0.688 per kWh.

In the application filed on June 11, 2014, DPC agreed to construct, operate, and maintain a 15-MW bunker C-fired diesel power plant for the supply of energy to Ormeco for 20 years, subject to payment of relevant electricity fees. The proposed project cost was P1.27 billion.

Based on the ESA, Ormeco will pay an amount equivalent to actual cost of fuel incurred, subject to adjustment to reflect the current costs of oil. The fuel fee will be the fuel cost incurred in generating electricity which should be passed through to the consumers at cost. The commission concurs with this scheme as it is consistent with its policy that an efficient fuel cost is a pass-through cost to the end-users.

Pursuant to the bid rules, the winning bidder may opt to construct its bunker-fired power plant within Ormeco’s premises subject to the payment of a rental fee of P100,000 per year.

DPC earlier acquired a property that would house the power plant. In preparing the bid rate, DPC assumed the cost of land at P20 million.

The commission evaluated the project cost based on the submitted documents and justifications made by Ormeco and DPC, and through benchmarking with previously approved rates for bunker C-fired diesel power plants.

ERC said DPC’s project cost per megawatt was slightly higher than those of the power plants used in benchmarking. Thus, the commission deems it necessary to further scrutinize the cost components of the Project Cost.

The applicants said that with the increasing growth of commercial establishments in the province and the continuous expansion of residential areas, the additional power supply of 15 MW Bunker-C fuel-fed facility will guarantee stable and efficient supply of electricity that will cater to the consumers’ increasing demand for power.

With its expected availability and power supply from wind and additional run-of-river hydropower plants, there is a need for an equivalent controllable plant to provide base load and spinning reserve to assure the continuous supply of quality electricity to the system.