Petilla asks DUs’ to aggregate demand to bring down electricity prices

Apr 1, 2015

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Energy Secretary Carlos Jericho Petilla is urging distribution utilities to come together to aggregate their demand to be able to leverage their collective power needs and bring down prices when negotiating with power suppliers.

 

GMA 24 ORAS Northern Mindanao TV Interview (photo by Mike Baños, NPN)

 

At a Renewable Energy Forum hosted by Xavier University-Ateneo de Cagayan’s Engineering Resource Center (ERC) Monday, 30 March 2015, Petilla said demand aggregation would in effect ensure no brownouts in the future at a lower price.

 

“A lot of our cooperatives are under-contracted. They will face a problem in the future. The others are only contracted for one year. The problem we have is it takes 4-5 yrs to build a plant,” he said. “We wanted to see if people are actually contracting. By how much? We’d like to see it. Sometimes these negotiations are not transparent.”

 

XU ERC Renewable Energy Forum with DOE Sec. Carlos Jericho Petilla XU ERC Renewable Energy Forum with DOE Sec. Carlos Jericho Petilla (photo by Mike Baños, NPN)

 

 

Petilla admits DUs have widely different demands and source their power from a plethora of suppliers but contracting long-term power supply agreements through demand aggregation should stabilize power supply at more affordable prices.

 

“One of the things we’re pushing for is demand aggregation. It’s all long term. If nobody builds a plant, there will be brownouts.  You look back or you look forward to make sure you don’t have brownouts.” 

 

 

“So we tried to gather them. We will extract a demand forecast and verify it. If the Energy Regulatory Commission (ERC) approves the scheme, DUs or coops will no longer have to negotiate with individual plants to cover their power needs.”

 

Oro Chamber Pres. Cerael Donggay raises a question wtih DOE Sec. Carlos Jericho Petilla during the XU ERC Renewable Energy Forum held 29 March 2015 (photo by Mike Baños, NPN)

 

“Why am I telling you about demand aggregation? I want to make sure electricity in the future is cheaper than what it is right now.  Is it going to be cheaper if we push for demand aggregation? Yes, but of course the big players don’t want this because they like to negotiate on their own.”

 

Petilla cited the recent experience of Quezon Power which recently negotiated a bilateral power supply agreement with Meralco for a price of P4.20.

 

In contrast, he cited the experience of eight electric cooperatives from the Cordillera and Ilocos regions which signed a memorandum of agreement (MOA) on power aggregation and pooled their uncontracted baseload demand of 103 megawatts for the period 2019-2039.

 

“The winner was GN Power with a price of P3.70. And I think it can still go down to P3.20 if we do a proper demand aggregation,” Petilla noted.

 

DOE Sec Carlos Jericho Petilla shares some light moments with XU ERC Officials and XU Pres Fr. Bobby Yap (photo by Mike Baños, NPN)

 

Similarly, 20 member cooperatives of the Association of Mindanao Rural Electric Cooperatives (AMRECO) started their aggregation project through their registered corporate vehicle AMRECO-PSAG (Power Supply Aggregation Group) Corporation even earlier and have signed a power purchase agreement involving the supply of 330MW with GN Power.

 

GN Power has partnered with Ayala Corporation’s power unit AC Energy Holdings Inc. for the construction of a 405-MW coal fired power plant in Kauswagan, Lanao del Norte which would supply AMRECO-PSAG Corp’s 330MW requirement under its PSA. The plant recently broke ground and is expected to be online by 2017.

 

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