Republic of the Philippines


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ERC grants interim relief on SMCPC’s Power Supply Contracts

The Energy Regulatory Commission (ERC) on 25 October 2016 resolved to grant  interim relief to five Mindanao distribution utilities (DUs) and San Miguel Consolidated Power Corporation (SMCPC) pertaining to the five (5) separate applications for approval of the Power Supply Contracts (PSCs) that were jointly filed with Cotabato Electric Cooperative, Inc. (COTELCO), Surigao del Sur II Electric Cooperative, Inc. (SURSECO II), Zamboanga City Electric Cooperative, Inc. (ZAMCELCO), Davao del Sur Electric Cooperative, Inc. (DASURECO), and Agusan del Sur Electric Cooperative, Inc. (ASELCO).  This involves the 2 x 150 MW Circulating Fluidized Bed (CFB) Coal Fired power plant located in Malita, Davao del Sur.

The grant of an interim relief will enable the SMCPC to obtain financial closing with various lenders as it will be authorized to implement its respective PSCs with the said DUs pending the ERC’s completion of the adjudication process and technical evaluations of the subject applications.  As such, the concerned DUs may already include in the computation of its generation charge the costs incurred for the supply that will be eventually sourced from SMCPC once commercial operations commence.  

An initial evaluation of the PSCs disclosed that the proposed rates are lower compared to two comparable plants having the same fuel source and capacity.  In the event that the final rate is higher than that of the interim rates granted, the resulting additional charges shall be collected by SMCPC from the concerned DUs. On the other hand, if the final rate is lower than that granted in the interim, the amount corresponding to the reduction shall be refunded by SMCPC to the concerned DUs.  The interim relief of the PSCs is without prejudice to any findings by the ERC in its evaluation of the proponent’s application for Certificate of Compliance (COC) which is needed prior to the commencement of commercial operations.  A major consideration is that supply contracts provide the most reliable and least cost generation mix for the benefit of the DUs’ member-consumers.

SMCPC’s PSCs covers a period of 10 years and involves a contract capacity of 10 MW for COTELCO; 5 MW for SURSECO II; 35 MW with ZAMCELCO; 10 MW with DASURECO and 10 MW with ASELCO.

“The ERC’s decision to grant interim relief to SMCPC pertaining to its PSCs  will help augment the deficient supply of power in Mindanao and ensure continuous power supply through the timely delivery of committed new capacities,” ERC Chairman and CEO Jose Vicente B. Salazar stated.   


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