SMC power unit gets OK for Davao coal plant

MANILA, Philippines - San Miguel Consolidated Power Corp. (SMCPC) can now get financial closure to proceed with the commercial operation of its 2x150-megawatt (MW) power plant in Davao del Sur after the power regulator provisionally cleared its power supply contracts (PSCs) with five Mindanao electric cooperatives (ECs).

The Energy Regulatory Commission (ERC) has granted interim relief to separate PSC applications jointly filed by five Mindanao ECs and SMCPC.

The five ECs are Cotabato Electric Cooperative Inc. (Cotelco), Surigao del Sur II Electric Cooperative Inc. (Surseco II), Zamboanga City Electric Cooperative Inc. (Zamcelco), Davao del Sur Electric Cooperative Inc. (Dasureco), and Agusan del Sur Electric Cooperative Inc. (Aselco).

The PSCs cover a period of 10 years and involves a contract capacity of 10 MW for Cotelco; 5 MW for Surseco II; 35 MW with Zamcelco; 10 MW with Dasureco and 10 MW with Aselco.

In a text message, ERC spokesperson Floresinda Digal said the interim relief authorizes parties to implement proposed contract pending final resolution of their respective application.

This means SMCPC can proceed to obtain financial closure with various lenders because its PSCs were already cleared by the power regulator pending completion of the adjudication process and technical evaluations of the subject applications.

The power company is working on a 2x150-MW circulating fluidized bed (CFB) coal-fired power plant located in Malita, Davao del Sur.

Granting the interim relief of the PSCs is without prejudice to any findings in its evaluation of the proponent’s application for Certificate of Compliance (COC) which is needed prior to the commencement of commercial operations, the power regulator said.

“The ERC’s decision to grant interim relief to SMCPC pertaining to its PSCs will help augment the deficient supply of power in Mindanao and ensure continuous power supply through the timely delivery of committed new capacities,” ERC chairman and CEO Jose Vicente B. Salazar said.

With the interim relief, the five ECs may now include in the computation of its generation charge the costs incurred for the supply that will be eventually sourced from SMCPC once commercial operations commence.

“A major consideration is that supply contracts provide the most reliable and least cost generation mix for the benefit of the DUs’ member-consumers,” the ERC said.

Based on the ERC’s initial evaluation, the proposed rates under the PSCs were lower compared to two comparable plants having the same fuel source and capacity. If final rates are higher and lower than the interim rates granted, SMCPC will charge or refund the ECs accordingly.