NEA nixes Luzon co-ops’ joint supply bid
DAREDEVIL Linemen are the troubleshooters of every electric cooperative, tapped to fix problems that trigger blackouts throughout Pangasinan and other parts of Luzon, as shown in this undated photo. The Pangasinan 1 Electric Cooperative is among power co-ops in Luzon seeking to find a common energy supplier but the bid was stopped by the National Electrification Administration. —WILLIE LOMIBAO
BAGUIO CITY—A group of power utilities in Luzon has been stopped by the National Electrification Administration (NEA) from negotiating a common electricity supply contract in their localities that could bring down the cost of electricity in their franchise areas.
The group called “R1+CAR+S1 Aggregation” began negotiating a power supply deal with a generation company in 2022 but it was halted in April by the NEA, saying it went against the policy of “fair competition” by excluding other suppliers.
The “R1+CAR+S1 Aggregation” is composed of Benguet Electric Cooperative (Beneco), which serves Baguio City and 13 Benguet towns; the electric cooperatives of Ilocos Norte (Inec) and Ilocos Sur; the Pangasinan 1 Electric Cooperative; the La Union Electric Cooperative; the Sorsogon 1 Electric Cooperative (Soreco 1), the Mountain Province Electric Cooperative; and the Kalinga Apayao Electric Cooperative.
This development has prompted Beneco to immediately search for a new power supplier because its current power supply contract with TeaM Energy, which operates the 1,200-megawatt coal-fired plant in Sual, Pangasinan, will lapse in 2024, according to documents and information supplied to the Baguio City Council on May 8.
Records sent to the City Council showed that the R1+CAR+S1 Aggregation undertook two public bidding processes in 2022 but both failed, prompting the utilities to take the next recourse under government purchasing rules, which was to open negotiations with the losing bidders, as well as the other companies that took part in the failed bidding processes.
They began talks with Therma Luzon Inc. (TLI), which offered to sell power at P8.38 per kilowatt hour. TLI lost in the initial bidding.
Failed negotiations
But the talks were voided in April by NEA Administrator Antonio Mariano Almeda, who ruled that the negotiations failed to include “more potential suppliers” to ensure fair competition as mandated by law.
In an April 24 letter to the group, Almeda said the NEA looked into the R1+CAR+S1 process in February and found that the collective “had intentionally and purposely limited the direct negotiation with two bidders who had participated in the two failed bidding,” referring to TLI and GNPower Dinginin Ltd.
He said the group failed to consider policies and circulars which require “the reasonableness of electricity rates.”
In his letter, Almeda reiterated that “soliciting offers from all potential suppliers or providers is necessary to obtain the best offer.”
Almeda, who is also the project supervisor of Beneco, concluded that the negotiations “have caused a greater risk of loss of supply… rendering the process completely doubtful and its integrity tainted.” He required the utilities to undertake their own competitive selection process (CSP) and present the NEA with their remedial plans.
Search for other sources
With Beneco’s seven-year supply contract with TeaM Energy (a joint venture between Marubeni Corporation and Tokyo Electric Power Co.) set to end next year, the collaboration with the Ilocos, Cordillera and Sorsogon utilities was one of the co-op’s options for sustaining power supply, although it had since rejoined the wholesale electricity spot market to ensure electricity next year would be unimpeded.
Beneco also has a mini hydro plant in Benguet, and may develop a much bigger 20-MW hydro facility.
Soreco’s supply contract is reportedly in the same predicament as that of Beneco, but further details have not been immediately made available.
Had the R1+Car+S1 negotiations proceeded, Inec would only need 3 MW to “satisfy (Ilocos Norte’s) renewable portion of our power mix,” said Inec director Jarius Mark Nalupta on Friday.
Nalupta said Inec has an existing 20-year contract with the coal-fired plant of Masinloc Power Partners Co. Ltd. (MPPCL), which is owned and operated by SMC Global Power Holdings Corp. MPPCL was one of the bidders in the R1+CAR+S1 CSP.
Rising fees
MPPCL provides 51 MW of the 58-MW power requirement of Ilocos Norte. But following a public outcry over rising power fees, Inec negotiated a reduction in supply to 25 MW.
“With the approval of SMC, Inec could source some portions of its power requirements from other electric suppliers while we wait for SMC’s prices to stabilize,” Nalupta said.
In January, Ilocos Norte Gov. Matthew Marcos Manotoc urged the provincial board to “obligate” renewable energy companies operating there to “serve” the local electric cooperative.
Ilocos Norte is host to wind farms in Burgos, Bangui and Pagudpud towns, as well as an expanding solar farm in Currimao town.
