Thursday, June 17, 2021

ERC denies Nordeco’s application for additional 15MW power supply

Photo by Matthew Henry on Unsplash

THE Energy Regulatory Commission (ERC) has denied the provisional authority applied by the Davao del Norte Electric Cooperative (Daneco) for FDC Misamis Power Corporation (FDCMPC) to provide additional 15 megawatts (MW) to the electric cooperative.

Daneco, now the Northern Davao Electric Cooperative, Inc.(Nordeco), and FDCMPC filed on September 30, 2020 a joint application, dated February 11, 2020, for a provisional authority for an electric power purchase agreement (EPPA). When Nordeco applied for the provisional authority, it was still Daneco.

In their joint application, the applicants stated that Daneco will have a power supply deficit of 24 MW in 2021.

The electric cooperative sources power from the Power Sector Assets and Liabilities Management Corporation (Psalm), EEI Power Corporation (EEIP), AboitizPower's Therma South, Inc. (TSI), San Miguel Consolidated Power Corporation (SMCPC), FDC Misamis Corporation, and Mindoro Grid Corporation (MGC).

In the power supply-demand scenario it submitted to ERC, Daneco states that its power supply will decrease to 88 MW in 2021 from 108 MW in 2020.

Among the reasons for the decrease in the power supply of Nordeco is Psalm not continuing to supply to the electric cooperative after 2020. Based on the investigation of the ERC, it was found that while Daneco's request for the renewal of its supply contract of 15 MW from Psalm was approved by Psalm's board on October 2020, Psalm "has yet to file its application before the commission."

It should also be noted that TSI has stopped supplying power to Daneco in 2018 after the electric cooperative incurred a debt of P256 million. Based on the data from ERC, Daneco sources around 15 MW from TSI.

With the deficit, Daneco said that it will need an additional power supply from FDCMPC to meet its growing demand.

However, when the regulatory commission validated the peak demand statistics of Daneco through the uniform reportorial requirement (URR), it discovered that Daneco's existing bilateral contracts are enough to supply the needs of its consumers.

The URR is a document required by the ERC and contains important statistics of distribution utilities. Among those data is the technical data like peak demand.

The regulatory commission also pointed out that Daneco failed to submit the required URR. They only started to submit the reports in July 2020.

"Upon perusal of the submitted URR, some of the figures were not readable and the Commission took note that there are lacking data particularly the technical data of Daneco which will show its total monthly peak demand," ERC said.

ERC said based on the submitted documents related to Daneco's supply-demand scenario, the applicants were "unable to clearly establish" the need for the additional power supply of 15 MW.

The ERC also said in its decision that the additional 15 MW from FDCMPC will impact the power rate of Daneco.

In its application, Daneco said that sourcing power from FDCMPC could reduce its monthly generation rate by P0.0492 per kilowatt-hour (kWh).

However, when ERC recalculated the monthly generation rate of Daneco with the inclusion of FDCMPC's supply and Psalm not supplying a cheaper power source, the monthly generation rate of Daneco is expected to increase by P0.0047/kWh.

Based on these grounds, ERC, in an order signed on December 16, 2020 and released on March 9, 2021, has denied the application of Daneco and FDCMPC for the provisional authority for an additional power supply.

Daneco was also ordered by ERC to submit its updated actual supply-demand scenario from 2015 to 2020 and forecasted supply-demand scenario from 2021 to 2015.

The electric cooperative was also ordered to submit a "clarification on the submitted rate impact simulation to prove its claims on the effect of supply of FDCMPC to the current generation mix."


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