ERC to speed up approval of power supply deals

The Energy Regulatory Commission (ERC), in a bid to avert power outages in Mindanao, has committed to fast-track the approval of electricity supply agreements and contracts as these are critical to increasing the volume of electricity that can be made available for distribution on the island.

In a statement, ERC executive director Francis Saturnino Juan explained that for as long as all the documentary requirements and other required submissions are forwarded to the agency without delay on the part of the proponents and if the proceedings are not protracted, petitioners could expect the early resolution of their applications.

Usually, the approval takes longer when the ERC has to conduct more hearings due to issues raised by other concerned stakeholders or when the petitioners themselves take too long to submit all the data requirements, he noted.

“But if sought by the parties and if warranted by the circumstances, the ERC issues provisional relief to support the development of these projects, while the final generation rates are still being evaluated and determined,” Juan said.

The ERC is mandated to review the power supply agreements entered into by the distribution utilities with the generation firms and to determine the reasonable generation cost associated with these purchases as these costs will be passed on to the end-power consumers.

However, the ERC also has to ensure that the approved rate will be sufficient to allow the generation company’s recovery of its reasonable costs and a reasonable return on its invested capital, Juan explained.

The commitment of the ERC to exhaust all efforts to ensure the timely approval of supply contracts, particularly those based in Mindanao, is critical as the grid has been suffering over the past few days from either having zero or low power supply reserves, enough to put it on red alert. This means that the grid does not have any back-up power in case a facility is not able to generate enough capacity to meet the electricity requirements of Mindanao.

The vulnerability of Mindanao to power outages stems largely from its high dependence on hydroelectric power plants, which supply more than half of the island’s electricity requirements. This is why the

Department of Energy has since been wooing investors to fill in the gap of around 2,500 megawatts, which represent the additional capacity needed by the Mindanao grid by 2030.

The power generation projects lined up for Mindanao include the 50-MW Mt. Apo 3 geothermal facility and the 5-MW Camiguin wind project of Energy Development Corp.; Green Power Davao and Green Power Cagayan de Oro’s biomass facilities, which have a capacity of 17.5 MW each; the 225-MW Agus 3 hydro project; Conal Holdings’ 200-MW coal plant in Sarangani; and Aboitiz Power Corp.’s proposed 300-MW coal plant in Davao.