Davao Light, SMCPC ink power supply contract

SAN MIGUEL Consolidated Power Corp. (SMCPC) is seeking approval for a contract to supply 60 megawatts (MW) to an electric distribution utility in Davao, which projected a deficit in its power supply up to 2020.

In their joint filing with the Energy Regulatory Commission (ERC), Aboitizled Davao Light and Power Co. (DLPC) and SMCPC forged the power supply contract ahead of an expected deficit between the utility’s supply portfolio and projected demand requirement from 2016 up to 2020.

DLPC placed the deficit at an average of 83.72 MW, with a projected peak deficit of 142.47 MW. The distribution utility said it had sought separate competitive offers from any peak-load and baseload generation sources from prospective suppliers.

“For the baseload generation source requirement, only one bid was received for each of the two competitive biddings conducted by DLPC, resulting in a failed bid. Thus, DLPC entered into direct negotiations with SMCPC,” the application read.

Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001, provides that distribution utilities may enter into bilateral power supply contracts, subject to the review of the ERC.

Under the contract, DLPC will acquire 60 MW or 60,000 kilowatts (kW) for the duration of the deal. It will maintain an hourly nomination of at least 40% of the contract capacity for the duration of the contract as its share in the minimum stable load of the power plant.

The power supply will be sourced from SMCPC’s circulating fluidized bed coal-fired thermal power plant in Barangay Culaman, Malita, Davao Occidental. The plant has two units, each with a capacity of 150 MW. The Department of Energy (DoE) has classified the plant as a “committed” project or one that has secured financing towards completion.

The plant is estimated to cost P30.824 billion, for which SMCPC’s parent firm SMC Global Power Holdings Corp. advanced $300 million, or around P15 billion at P50 to a US dollar.

“It was initially financed through 100% equity since the funding thereof was undertaken by the said parent company without interest payments,” the joint filing read.

However, SMCPC intends to undertake project financing with a target debt-to-equity ratio of 70% to 30%.

ERC previously authorized National Grid Corporation of the Philippines (NGCP) to build a 230-kilovolt MalitaMatanao transmission line, which runs from Davao Occidental to Davao del Sur. Upon the completion of the line, SMCPC said it would execute the necessary service agreement with NGCP.

Ahead of the approval of the power supply contract, the contracting companies have asked the ERC for a provisional authority.

”The testing and commissioning power to be generated by SMCPC during its Plant’s pre-commercial operations may readily be used by DLPC when it needs to augment its power supply requirements,” the joint filing read.

“To be able to augment the supply requirement of DLPC by providing 60 MW of contracted capacity and to timely recover the cost of such supply, there is a necessity for the immediate and provisional approval of the Joint Application in order for DLPC to deliver the much needed power to its customers,” it added. —