San Miguel Global Power (SMGP), the power generation arm of diversified conglomerate San Miguel Corporation (SMC), has come to the rescue of debt-saddled Albay Electric Cooperative (ALECO), assuring the province of continued power supply for the next 12 months.
This developed after the National Electrification Administration (NEA) helped convince SMC President Ramon S. Ang and prevented ALECO’s imminent disconnection from the grid following its failure to secure emergency power supply contracts with other firms due to its credit issues.
Earlier, the Independent Electricity Market Operator of the Philippines (IEMOP), independent market operator of the Wholesale Electricity Spot Market (WESM), raised concerns over recent and massive power purchases by ALECO.
IEMOP sought credit support for ALECO’s purchases given the latter’s credit standing.
Following a series of discussions, SMC through its subsidiary Masinloc Power Partners Co. Ltd. (MPPCL), owner and operator of the 1,000-MW Masinloc Power Plant, agreed to supply in full ALECO’s power requirements for an entire year.
This will shield ALECO from any further credit concerns with IEMOP that could compromise energy security in the franchise area.
“This power supply agreement is not for-profit, and is primarily in consideration of the welfare of the people of Albay, who would have otherwise been disconnected from the grid. While SMGP has pending legal issues with ALECO which we are pursuing, we are still very much concerned about the welfare of the people of Albay,” said Ang.
“Thanks to NEA, particularly Administrator Nani Almeda, who stepped in to help address this critical concern of power users in the province, all stakeholders have now come together to find a workable solution,” Ang added.
NEA Administrator Antonio Mariano “Nani” C. Almeda, expressed gratitude to SMC for coming to ALECO’s rescue by supplying it power for an entire year. He also cited the DoE for its support of the agreement.
“Since we became involved, our goal was always to ensure continuous power supply to ALECO customers, despite the cooperative’s troubles. While no emergency power contracts could be finalized with the other generation firms, SMC and RSA did not hesitate to help when we approached them,” Almeda said.
“We will continue to work with all stakeholders to help make this supply agreement work for the benefit of consumers,” he added.
Ang gave the NEA and the Department of Energy (DoE) full assurance of SMGP’s support in providing the entire power requirements of those in ALECO’s franchise area.
SMC, NEA, and ALECO signed the emergency power supply agreement (EPSA) on December 29 at the SMC head office.
This, despite ALECO’s pending legal issues with another SMGP firm, Albay Power Energy Corp. (APEC), which includes unpaid claims and advances amounting to P5 billion, related to their earlier terminated concession agreement.
Following the termination, ALECO sought the intervention of the NEA, which took over the distribution business of ALECO in a fiduciary capacity as allowed under its charter.
The NEA is primarily focused on ensuring the continued supply of power over the ALECO franchise area.
SMGP management emphasized the supply of uninterrupted power to ALECO’s franchise area is without prejudice to its rights under the Concession Agreement.
Apart from assuring continued electricity supply, SMGP also said the applicable tariff rate under the supply agreement is competitively priced, based on the prevailing conditions in the fuel commodities markets and the credit standing of ALECO.
In the interest of ALECO consumers, SMGP further provided consumer protection against fuel price risks by capping its tariff rates to P10/kwh for the first half of the 12-month supply term and allowing further reduction in the monthly tariff for the remainder of the term.
The EPSA is subject to ERC approval, which will be secured by the parties, with the full support of NEA and the DOE.
