The LRAC Benchmark for Visayas

The Energy Regulatory Commission posted a Decision last week to its website (two months after the Decision was signed, by the way) that established the 2008 Long Run Avoidable Cost (LRAC) for the Best New Entrant Plant in the Visayas.

This is the benchmark that the ERC has used in justifying and approving the pricing provisions to be incorporated into Kepco’s sales contracts to the Distribution Utilities (DUs)in the Visayas region for power from their new coal-fired plant under construction in Cebu.

The 2008 LRAC for Visayas is P4.2511/kWh.

It’s predicated on the following assumptions:

  • January 1, 2008 Base Date
  • $2,567/kW Total Investment Cost (all-in cost) for a 200 MW coal-fired plant
  • 80% Capacity Factor
  • 10% Auxiliary Load
  • 10,275 But/kWh
  • 8,800 Btu/lb
  • $52.47/MT coal price
  • 40.65 Php per US$

Note: I’ve made some conversions to put heat on a BTU basis (I think I did it correctly).

The LRAC is adjustable by [numerous] provisions in the contract. It does not include VAT, which right off the bat raises this price (for a non-renewable fuel) by another 12%. It is also based on the coal and coal transportation costs that existed in the 4th Quarter of 2007. As general market prices for coal go up and down and as the exchange rate goes up and down and as inflation goes up and down, the prices Kepco may charge goes up and down.

Here is a worksheet I used for forecasting the LRAC using the ERC approved methodology and allowing me to dial-in varying assumptions, including those for inflation, coal price and exchange rate. Feel free to download it for your own use. No warranties.

On this day..

This entry was written by Nick Nichols, posted on Sep 5th at 1pm, filed under philippines. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Post a comment or leave a trackback: Trackback URL.

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