Ileco 3 supply contracts exceed demand in 2011


By Francis Allan L. Angelo


CONSUMERS of Iloilo Electric Cooperative (Ileco) 3 will be made to pay electricity more than what they need if the cooperative pushes through with the 25-year power supply agreement (PSA) with an independent power producer (IPP).


This was the analysis of Ileco 3’s Technical Services Department (TSD) after going over the contract offered by Applied Research Technologies Phils., Inc. (Artech) and approved by the Ileco 3 board.


Based on the study conducted by Engr. Antonio Lazarraga, TSD manager, Ileco 3 will buy 15 million kilowatt-hours of electricity from Asea One, a renewable energy producer, and another 55.75 million kWh from Artech’s 6-megawatt diesel-fired power plant. This is because Ileco 3 recently signed a supply contract with Asea One, one of the IPPs that joined the bidding conducted by the Panay-Guimaras power consortium.


The minimum energy off take (MEOT) or total quantity that Ileco 3 will have to buy from the two IPPs will total 70.75 million kWh which is 8.383 million kWh more than the projected demand of the cooperative of 62.367 million kWh for 2011.


Ileco 3 will have to pay P458.68 million annually to Asea One and Artech for the power they contracted. And the cooperative will pay P55.663 million annually for the excess power whether or not it consumes its MEOT from the two IPPs.


The projected demand of Ileco 3 is embodied in its Integrated Computerized Planning Model which is regularly submitted to the National Electrification Administration (NEA).


In a simulation of Ileco 3’s electricity bill, residential consumers will pay P9.1229 per kWh for Artech’s generation charge alone. This does not include distribution charges and taxes mandated in the Electric Power Industry Reform Act (Epira).


In its contract, Artech offered a base rate of P6.64 for its diesel-fired power plant sans taxes and other charges.


Based on the same simulation, if a residential consumer pays P971.75 for consuming 103 kWh for the month of April 2009, the monthly bill will increase by 40.73% or P1,367.54 if Artech’s contract takes effect.


Commercial consumers will incur an average increase of 48.29% in their monthly bill while industrial users will incur 51.84% increase in their monthly bills, still based on Ileco 3’s simulation.


In Artech’s contract with Ileco 3, the cooperative will be compelled to buy 55.75 million kWh from Artech for the first three years using a 6MW diesel powered plant. This includes the peak load, or electricity that will be produced during the period of the day when electricity consumption rises.


But based on the calculation of Ileco 3, Artech will operate the diesel plant at 117 percent of its capacity just to produce 55.75 million kWh of electricity in one day.


The standard capacity of plants to produce electricity is around 80%. The regular capacity may exceed 10% but only for one hour.


Artech said in the contract its plant will have a heat rate of 10,000 British Thermal Unit (BTU), unit of energy used in the power, steam generation, heating and air conditioning industries.


But Artech’s plant is not “very sophisticated compared to existing plants” such as the 30-year-old Panay Diesel Power Plant in Dingle, Iloilo which has a heat rate of 9,600 BTU.


But the bigger question is this: Can Artech supply power to Ileco 3 using its biomass power plant? Will Artech’s offer result in cheaper power rates to consumers? (To be continued)