Aboitiz, ALECO Ink Power Supply Agreement

Sunday, May 2nd, 2010

Legazpi City (29 April) -- Member-consumers of the Albay Electric Cooperative (ALECO) expressed a sigh of relief after the local electric cooperative was successful in getting a bilateral agreement with Aboitiz Power Renewable's Inc. to supply cheap electricity in the province.

ALECO has recently entered into an agreement with Aboitiz, an independent power provider (IPP), for the latter to provide the cooperative with 40 percent of its electricity requirements.

Engr. Alex Realosa, ALECO acting general manager, said he himself and ALECO Board Chair lawyer Rudolfo Bonafe signed the agreement on April 12, 2010 marking the start of a bilateral contract between the two power firms.

The contract states that Aboitiz, the firm also operating the geothermal power plant in Tiwi, Albay, would provide 40 percent of the local cooperative electricity power requirements.

"ALECO would pay Aboitiz P50 million worth of electricity supply per month," Realosa said.

Aboitiz would be selling its power to ALECO by P4.21 per kilowatt hours compared to P65 per kilowatt hour imposed by the Wholesale Electricity Spot Market (WESM).

He said the agreement would be beneficial to the 150,000 member consumers of the cooperative as this would bring down its power rates unlike the very high electricity price spikes imposed by the WESM.

WESM is administered by the Philippine Electricity market Corporation (PEMC) and is presently supplying ALECO with 60 percent of the 23 million kilowatt hour electricity power requirements of the cooperative.

Realosa said he is working out for other bilateral agreements with IPPs as provided for by the Electricity Power Industry Reform Act or the EPIRA law granting cooperatives to enter into agreements with IPPs for power supply generation and distribution.

He said ALECO is presently facing a tight spot in its finances because of its total dependency for its source of electricity from WESM.

Realosa said aside from the P1.8 billion in outstanding accounts from the National Power Corporation (NPC) and Transco, the WESM through the PEMC has billed the cooperative covering January 26 to February 25 this year a staggering amount of P317 million for its electricity supplied to ALECO.

Another statement in the amount of P321 million was billed by PEMC covering the months from March to April this year.

ALECO receives from some P150 million in monthly sales revenues from 150,000 member-consumers across the 15 towns and three cities of the province.

He claimed that the WESM electricity price of P65 per kilowatt hour hit a 300-percent spike from the P7 previously priced, saying this would definitely paralyze the cooperative operation.

The price spike, once passed on to consumers, will be prejudicial to them and will eventually bear the brunt of this exorbitant and baseless billing, Realosa said.

For this reason, the ALECO has petitioned the Energy Regulatory Commission (ERC) to arbitrate and issue a cease-and-desist order directing the PEMC to refrain from collecting from the cooperative the payment for its electricity bill until this case is finally decided by the commission. (PNA/PIA)