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With SMEC deal, Ilocos Norte co-op sees more stable power supply

/ 01:45 AM August 23, 2012

DINGRAS, Ilocos Norte—The Ilocos Norte Electric Cooperative (Inec) hopes that a new five-year supply contract with San Miguel Energy Corp. (SMEC) will stabilize the power situation in its area.

The energy sales contract (ESC) was the subject of a public hearing that the Energy Regulation Commission held at Inec’s office here late last month.

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SMEC, the power-generation arm of San Miguel Corp., is proposing to supply Inec with up to 55 megawatts (MW) of power until 2016.

ERC Commissioner Jose Reyes, who presided over the public hearing, said the contract would not immediately translate to lower power rates for Inec consumers.

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“But it will provide a more stable power situation in Ilocos Norte considering that Inec has only the spot market (wholesale electricity spot market, or Wesm) as its main energy source at the moment,” he said.

Reyes explained that it would be difficult for the government to control power rates because economic and market forces dictate the prices of energy.

He asked Inec officials to determine the cooperative’s capacity to buy energy to ensure that its power requirement would not be lower than what was stated in the contract.

“Inec cannot pass on to its consumers additional charges for excess power or unused energy,” Reyes said.

SMEC will sell power to Inec at a rate lower than the P1.26 per kilowatt hour charge of the state-run National Power Corp.

Rey Lazo, Inec board president, said SMEC’s proposal was considered the most beneficial to the cooperative and its power consumers, upon evaluation of offers from other suppliers.

“We need a more stable power supply for the province. We are assured of a continuing power delivery under the contract,” Lazo said.

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Inec and SMEC had forged a power supply agreement last year after Inec’s contract with Northwind Power Development Corp. (NWPDC) ended.

NWPDC runs the first commercial wind power plant in Bangui town. Power from the wind farm is now being sold in the spot market.

On the other hand, SMEC derives its power supply from independent power producers.

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TAGS: Contract, Energy, Ilocos Norte Electric Cooperative (Inec), Philippines - Regions, power supply, san Miguel energy corp.
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