Masinloc plant expansion commits 92 megawatts to north Luzon co-ops

Posted on October 18, 2015 07:15:00 PM

AES Philippines has closed a deal to supply power to seven electric cooperatives in northern Philippines for 20 years, opening the way for a reduction in electricity rates in the area.

The power supply agreement will start in 2019 and will amount to a capacity of 92 megawatts (MW), which the company will deliver from its 300-MW expansion of the Masinloc power plant in Zambales province.

It will cover the power requirement of the electric cooperatives in Ilocos Sur, Ilocos Norte, La Union and Pangasinan, as well as provinces in the Cordillera Administrative Region.

Neeraj Bhat, AES Philippines managing director, said the electric cooperatives and their customers “will enjoy the most competitive generation rate ever signed for a new power plant in the Philippines.”

The electric cooperatives in the area last year came up with an estimate of their combined power requirement and to source it from a new facility. This came before a Department of Energy circular in June 2015 ordering power distribution utilities to go through a “competitive selection process,” or CSP, when sourcing future power needs.

The process drew several qualified generators, with AES Philippines winning the bid to provide the most competitive rate from the planned expansion of its Masinloc plant. The company has secured permits to start construction.

“The design, evaluation and execution of the entire bid process was competitive, transparent, fair, and conducted with integrity,” Mr. Bhat said in a statement.

Egdon A. Sabio, president of the Ilocos Region association of electric cooperatives, said the group “pursued aggregation because individually we are small and weak, but as a group, we are strong.”

“The objectives of the aggregation are to secure the supply of electricity for our captive customers, achieve the least-cost price of power through CSP to benefit our consumers, and manage our market risks,” said Mr. Sabio, who is also general manager of the Ilocos Sur cooperative.

He said in a statement that his group’s adviser estimated that the agreement would result in up to 20%-30% cut in the retail and generation rates for about 3.5 million people in the cooperatives’ service area.

“We are pleased to enter into this long-term relationship with AES Philippines,” he said.

The parties to the agreement with AES Philippines are Abra Electric Cooperative, Inc., Ilocos Norte Electric Cooperative, Ilocos Sur Electric Cooperative, Kalinga Electric Cooperative, La Union Electric Cooperative, Mountain Province Electric Cooperative, Inc., and the Pangasinan III Electric Cooperative.

AES Philippines, the local unit of global energy group AES Corp., said it was “pleased to be a part of this landmark aggregation and is committed to making it a successful example of the benefits of competition, transparency and fairness in power procurement.” — Victor V. Saulon

Source: www.bworldonline.com