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ERC junks Daneco’s petition for new supply agreement




THE ENERGY Regulatory Commission (ERC) has denied the joint application for provisional authority of the Davao del Norte Electric Cooperative (Daneco) and the FDC Misamis Power Corp. (FDCMPC) for the latter to supply 15 megawatts of power to the cooperative.

In its December 16, 2020 18-page order released on March 9, ERC also ordered Daneco, which its management renamed Northern Davao Electric Cooperative two years ago, “to submit its updated actual demand-supply scenario from 2015 to 2020 and forecasted demand supply-scenario from 2021 to 2025 and clarification on the submitted rate impact simulation to prove its claims on the effect of supply of FDCMPC to the current generation mix.

The same ruling also pointed out that contrary to the claim of Daneco that including the additional 15 megawatts in its power mix would result in reduced power rates, the rates would even increase.
The regulatory body also directed the cooperative to submit its compliance of the order 15 days after receiving it.

“Daneco needs to submit complete documents to further substantiate its allegation that the subject EPPA covering the 15MW (megawatt) supply is really necessary to augment the growing demand of Daneco,” the order said.

In denying the application, the regulator said the petitioners “were unable to clearly establish through their submitted documents the urgency and the necessity” of granting the purchase agreement.
They were also “not able to substantiate their claim that upon the inclusion of the FDCMC supply, the monthly generation rate of DANECO is expected to decrease.

The government agency even noted that upon its evaluation, by the time the supply is included in the mix, the rates would even go up by P0.0047 per kilowatt-hour.
“The Commission needs to further evaluate and assess the reasonableness of the proposed efficiency cap on fuel,” it noted.

In evaluating the application, the ERC noted that Daneco “appears to have failed to submit either the soft and/or hard copies of its accomplished URR (Uniform Reportorial Requirement) together with the required supporting documents.

On December 19, 2018, the commissioned issued a show cause order directing the cooperative to explain why it should not be administratively penalized for not complying with the reportorial requirement.

It also pointed out that based on record, the cooperative only started submitting the requirement in July 2020 in hard copy and that some of the ifgures cannot even be read and that “there are lacking data particularly the Technical Data of DANECO which will show its total monthly peak demand.”

The claim of Daneco that it would lose 15 megawatts from the Power Sector Assets and Liabilities Management Corp. (PSALM) would only be until 2020, was not true, the ERC noted.
When it sent an electronic mail to PSALM, the commission said that the renewal of the supply agreement between Daneco and PSALM was on process and would take effect in January 21 until December 2025 and that it was approved by its board on October 28, 2020.

With the absence of reports from Daneco on its supply and demand figures, the ERC used the its real technical situation through the Billing Determinant Demand (BDD) from the National Grid Corp. of the Philippines (NGCP) in making the evaluation.

In the joint application, Daneco pointed out that it needed another 15 megawatts from FDCMPC, which operates a coal-fired power plant in Misamis Occidental because of its projected shortfall by 2021 which it foresaw would increase t0 24 megawatts.

Aside from PSALM, supplying Daneco include the EEI Power Corp. SMC Global Power, the FDCMPC, Therma South Inc. and the Mindoro Grid Corp., the latter being a supplier only for the Island Garden City of Samal.

However, Therma South, a subsidiary of Abotiz Power Corp. has stopped supplying Daneco since 2018 as it has failed to pay its debt of about P300 million, based on reports.

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