I was invited to make a presentation to the PhilRECA Board of Directors meeting on October 16.
Click the image to view or download a copy of the presentation deck.
The seven ECs on Panay and Guimaras are in the midst of procurement for an aggregated 90 MW of base and intermediate load resources beginning in 2011 when their NPC Supply Contracts expire.
Besides giving an overview of what we did on Panay, I provide some fundamental points relating to EC procurement in general:
- The ECs – through the NPC tariff – have been and are paying a lot of money to NPC to do their procurement for them.
- Procurement is just one element of many power supply activities that NPC previously conducted and that ECs must now continue to do on their own – and pay for on their own.
These “power supply activities” include:
- Planning
- Procurement
- Contract Management
- Dispatch Services
A subtle point I’ve been trying to get across to as many people that will listen is that in the past, the costs associated with those four activities have been (easily) passed through to retail customers through the regulated NPC cost-of-service tariff. The problem facing the ECs right now is that no such mechanism exists that easily passes through these same costs as incurred by distribution ECs.
The need for conducting these activities doesn’t just disappear under EPIRA – but the responsible party will no longer be NPC. If the ECs include them in their cost of service, it doesn’t increase costs to end-users – it replaces the costs that end-users were paying NPC for.