BACOLOD CITY, Negros Occidental -- The Central Negros Electric Cooperative (Ceneco) signed on Tuesday a power supply agreement with the First Farmers Holding Corp., a bagasse biomass co-generation power plant in Talisay City, Negros Occidental, beginning October 2008.

Ceneco president Roberto Montelibano said the initial five megawatts from the First Farmers power plant, which could produce electricity using bagasse (sugarcane waste), would help cushion the effects of the power shortage now being felt in the Visayas grid.

Ceneco's coverage area that included Bacolod City has been experiencing brownouts in the last three days because of a supply shortage of up to 25 MW, Montelibano said.

Even with the power purchase agreement with FFHC, Montelibano said Ceneco would still have to purchase 40 MW from Kepco-Salcon Power Corp., a coal-fired power plant in Cebu, to meet the increasing power needs of its coverage area.

He said the Northern Negros Geothermal Power Plant in Bago City could produce only 5 MW and no other alternative power sources have been offered.

He also said that Ceneco would be willing to buy power from those opposing the purchase of power from Kepco if they could offer an alternative source.

Rosendo Lopez, FFHC vice president, said his firm's bagasse biomass co-generation power plant could produce 21 MW.

"We will be producing cheap renewable energy from sugarcane waste so it will not affect food security since we will still be producing sugar," Lopez said.

The P500-million FFHC power plant is targeted for commissioning in September and for commercial operation by October 2008.

Under the signed agreement, FFHC will sell 5 MW of power to Ceneco for two years from 2008 to 2010. The power supply from FFHC will be delivered to Ceneco through its existing 69 KV transmission line in Talisay City.

The FFHC selling price would be one percent less than the cost of power supplied by the National Power Corp (Napocor).

At current rates, the FFHC power cost would be about three centavos less per kilowatt-hour than that of Napocor, Montelibano said.

The plant could be entitled to carbon credits from the World Bank because the plant would produce renewable energy, FHC corporate secretary Rafael Lizares said.

Lizares urged government to provide more incentives to encourage all sugar mills on Negros Island to produce renewable energy for commercial use.

"If all 10 sugar mills in the island produce power for sale using bagasse, we will have no power shortage," Lizares said.

Montelibano said he asked another sugar mill to put up a similar project.

Montelibano said Ceneco has been requiring 100 MW for its current peak requirement but the figure could reach 120 MW after 2010.