Aboitiz RE unit eyes 10-year supply deal

MANILA, Philippines - The renewable energy arm of Aboitiz Power Corp. (AP) plans to supply electricity to a distribution utility in Nueva Ecija for up to 10 years.

In a public notice, the Energy Regulatory Commission said AP Renewables Inc. and Nueva Ecija I Electric Cooperative Inc. (NEECO I) jointly applied for the approval of a power supply agreement (PSA).

“To prevent a delay in the implementation of the PSA and to mitigate the impact of the spot market prices in the Wholesale Electricity Spot Market (WESM), a provisional authority is prayed for,” the companies said.

Under the supply deal, AP Renewables will provide the electricity requirements of NEECO I for seven years, with an option to extend the contract by another three years.

NEECO I currently sources its electricity from Lopez-owned First Gen Hydro Power Corp. but the deal is expiring late this month.

Hence, the electric cooperative said it conducted a bidding process for the new supplier. It attracted interests from First Gen, AP Renewables, GN Power Mariveles, San Miguel Energy Corp. and Trans-Asia and Energy Development Corp.

“After evaluating the offers of the suppliers, it has determined that the proposal of AP Renewables was the most advantageous and beneficial to its member-consumers,” NEECO I said.

The new PSA was signed last September following the awarding of the contract for electricity supply to AP Renewables.

AP Renewables owns and operates the Tiwi geothermal power plant in Albay and the Mak-Ban geothermal project in Laguna with a combined generating capacity of 747 megawatts.

AP Renewables will initially supply 9.08-10.89 million kilowatts-hours (kwh). But given increasing demand in NEECO I’s franchise area, the supply will jump to 11.67-14 million kwh late in 2019.

NEECO I’s franchise area covers the city of Gapan and the municipalities of Jaen, San Antonio, Cabiao and San Isidro, all in Nueva Ecija.

Based on the rate impact analysis covering the billing period of January to September 2012, AP Renewables’ rate is more expensive at P4.5466 per kwh compared with the expiring PSA that costs P3.7726 per kwh.

But NEECO I is entitled to discounts through early payments of its liabilities to AP Renewables.

AP is the holding company for the Aboitiz Group’s investments in power generation, distribution, retail and power services. It is into several coal-fired, hydroelectric and geothermal assets across the country.