Least cost for power deal sealed in Bohol

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Least cost for power deal sealed in Bohol

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Two distribution utilities (DUs) in the province ratified their agreement to jointly supply the Province of Bohol with electric power at the least cost.

In the Memorandum of Agreement (MOA) Signing which took place Friday at the Governor’s Mansion, BOHECO I and BOHECO II sealed the bond to jointly plan and implement the One Bohol Power Electric Cooperative Joint Competitive Power Supply Procurement Process (JCPSP) in the province.

The General Managers of both DUs signed for and in their behalf: Engr. Dino Nicolas T. Roxas for BOHECO I and Engr. Eugenio R. Tan for BOHECO II.

Other attendees who witnessed the event were Gov. Edgar M. Chatto, BEDAG-TWG Chair Engr. Emigdio Acierto, Board Presidents Exequiel Agunod and Virginia Item for BOHECO I and BOHECO II, respectively, representatives from the Department of Energy (DOE) and other stakeholders.

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Gov. Edgar M. Chatto reveled in this “great milestone in the history of power supply in Bohol ; but everyone should understand that everybody must work together for this to become a success.”

This bold move is the result of numerous consultations of the Provincial Government with power stakeholders in the province and also, of the results of the studies made by the Technical Working Group of the Bohol Energy Development Advisory Group (BEDAG-TWG).

Republic Act No. (RA) 9136, otherwise know as the Electric Power Industry Reform Act, provides that a distribution utility shall have the obligation to supply electricity in the least cost manner to its captive market, subject to the collection of the retail rate duly approved by the Energy Regulatory Commission (ERC).

Consequently, ERC’s guidelines for the Recovery of Costs for the generation component of the DUs’ rates provide that “utilities may enter into new bilateral power supply contracts with existing or new generation companies to supply their captive markets and their contestable markets following open access and retail competition.”

Moreover, to satisfy the ERC Resolution 21 directive to ensure sufficient supply of electricity, the Provincial Government deems it necessary for DUs to enter into power supply bilateral contracts with power producers for generation and/or ancillary services, which of course, are subject to be reviewed by the ERC.

Interestingly, it was noted earlier that bilateral power supply contracts such as this could mitigate the risks of the DUs from the volatility of prices in the Wholesale Electricity Spot Market (WESM).

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It was also learned that the Bohol Island Least-Cost Power Supply Plan could identify and quantify the uncontracted demand that the DUs are obligated to procure to supply their captive customers.

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Therefore, joint actions such as this shall result in improved efficiency, reliability of service, reduction of costs and compliance to the performance standards prescribed in its Implementing Rules and Regulations (IRR).

Hence, considering all factors, the DUs of Bohol have agreed to mplement a competitive procurement process and contracting of their aggregated short-term and long-term power supply requirements called the JCPSP.

So as a consequence, the province’s BEDAG resolved to pursue the power supply aggregation of the DUs and to conduct joint action in the procurement of power supply.

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This is to achieve the so-called economies of scale and the objectives and goals stipulated in the Bohol Island Power Development Plan.

“People might be apprehensive of this daring and innovative move, but still, Boholanos are crossing their fingers that this bold approach would be more than a success,” Gov. Chatto said with calm assurance. (JLV/PGBh/EDCom)

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