Subic Enerzone gets permit to operate power system

The Energy Regulatory Commission (ERC) has granted the Aboitiz-owned Subic Enerzone Corp. (SEZ) a provisional authority (PA) to operate the power distribution system in the Subic Bay Freeport Zone for the next five years.

With an approved rate 59.75 centavos per kilowatthour (kwh), this is about 40 centavos lower than the current P1/kwh rate in the zone.

In its order, the ERC said the SEZ’s rate is comparable with the rates in nearby areas or utilities.

The ERC said "it will be in the best interest of the customers for SEZ to operate the power distribution system in the economic zone and to discharge its functions under the distribution management services agreement (DMSA)."

The commission also recognized SEZ’s claim that it would be willing to terminate the contract if it fails to operate by Oct. 25, the agreed turnover date.

On May 15 this year, Aboitiz Equity Ventures and subsidiary Davao Light and Power Co. entered into a DMSA for the privatization of the Subic Bay Metropolitan Authority (SBMA) power distribution system on a rehabilitate-operate-transfer agreement.

Under the DMSA, SEZ is mandated to invest P68 million within the next five years to rehabilitate the existing power distribution system and is required to reduce its system loss from a high of 14.1 percent to 9.5 percent as mandated by law.

The ERC noted that for the first five year-period, the power distribution charge may be voluntarily decreased by SEZ or directed by the SBMA board of directors if the return on rate base exceeds the 12 percent ceiling.

Moreover, the ERC also directed SEZ to submit within 15 days the following data/documents: derivation of the proposed power distribution charge of 59.75 centavos; audited financial statement for the test year period; statement of invested capital and rate of return for the test year period; five-year projected financial statement and statement of investment and rate of return; customer profile and comparison of revenue and cost per kwh under the proposed rates and five-year projected cash flow statement.