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BATELEC II Gets ERC Nod on its Power Supply Agreement

In a Notice of Resolution issued to Batangas II Electric Cooperative, Inc. (BATELEC II), the Energy Regulatory Commission (ERC) granted provisional authority to the former’s Power Supply Agreement with Bac-Man Geothermal Inc. (BGI) in order to ease the power interruptions within its franchise area.  

“The Commission expects that the provisional approval of the PSA between BATELEC II and BGI will result to a positive development in the energy supply chain in BATELEC II’s franchise area.  This will provide some relief to BATELEC II’s customers as their power supply will be augmented, which will mean a more stable electricity,” said ERC Chairperson and CEO Agnes VST Devanadera.

In the ERC’s Notice of Resolution, the provisional authority accorded to BATELEC II and BGI is subject to the following conditions: (1) the applicable rate shall be PhP4.3767/kWh, subject to the formula under the PSA; (2) the other sources shall be limited only to renewable sources; (3) the rate to be applied for the Replacement Energy is equivalent to the approved PSA Rate or the Actual Rate, whichever is lower; and (4) BATELEC II is allowed to reduce its contract capacity and contracted energy due to a Buyer’s Disconnected Customer.  However, such customer is not limited to transact only with BGI relative to its demand.

Further, the PSA parties, i.e., BATELEC II and BGI, were directed to comply with the efficient utilization of the contracted capacity from BGI, bearing in mind its obligation to supply at least cost, and for BATELEC II to share the fifty percent (50%) of the availed Prompt Payment Discount (PPD) to its member-consumers to reduce their electricity bill.  

Moreover, the interest or penalty and any other charges incurred by BATELEC II shall not be allowed to be passed-on to its member-consumers, and that the final generation cost that can be recovered by BGI and the contract capacity by BATELEC II, including all the evidence submitted, shall be reviewed and evaluated by the Commission in its final resolution of the instant application.
The provisional approval is necessary in view of the fact that this will be used by BATELEC II in its compliance with the requirements of the Renewable Portfolio Standards (“RPS”) for on-grid areas. Also, this will serve as additional capacity to secure more stable, reliable and efficient source of power supply for a term of nine (9) years, as well as at a reasonable rate.

The Commission notes the 100% availability of supply requirement under the PSA, except for instances of Force Majeure. Hence, BGI shall not be entitled to claim for any outage allowance, and it shall make available to BATELEC II the contracted capacity and energy notwithstanding the actual outage of the nominated power plant.

The ERC’s issuance of a Notice of Resolution on cases deliberated by the Commission is a newly-adopted innovation to ensure that the grant of immediate relief to consumers will be realized through immediate notification of the Commission action.    

“The Commission, however, reminds BATELEC II and BGI that in the event that the final rate is determined to be lower than the provisional authority granted, the amount corresponding to the reduction shall be refunded by BGI to BATELEC II, which shall thereafter be refunded to its member-consumers by crediting the same in their electric bills over a period to be determined by ERC,” ERC Chair Devanadera clarified.


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