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BAQUIO
CITY—The Benguet Electric Cooperative (Beneco) is now
ready to enter trading in the Wholesale Electricity Spot
Market (WESM) after the expiration of its 25-year
contract with the National Power Corp. (Napocor) on
March 25.
Beneco
general manager Gerardo Verzosa and the Beneco board
members were encouraged by a briefing given by Renato
Balintec, general manager of Ilocos Norte Electric
Cooperative (Inec), about his successful and profitable
participation in the WESM.
Inec was
the second distributing utility of the three, out of 119
electrical cooperatives, that have participated in the
WESM. Inec started trading with WESM on December 2006.
“Inec
has invested about P9 million when it started to
participate at the WESM in 2006… and now has P28 million
in the bank,” said Balintec.
Beneco
gets 68 percent of its supply from Napocor, 29 percent
from Mirant and 3 percent from others.
In a
projected cost comparison prepared by Beneco’s WESM
specialist engineer Mario T. Gayao using as basis a
November 2007 record of power distribution, it turns out
that there can be a reduction of cost from P90,230,439
in sourcing power from Napocor and Mirant to
P71,139,638.60 if what is sourced from Napocor was
sourced from WESM.
That
means a savings of P19,090,800.47, based on a total
24,556,111 kilowatt-hour (kWh) distribution for the
month. The difference lies in the difference of P3.645
cost per kWh of the Napocor to the P2.600 of WESM, with
Mirant staying constant.
The
comparison also showed that if only 10 percent (of
17,767,111 kWh from Napocor based on the November sample
presentation) was bought from WESM as required of a
distributing utility, there would still be savings from
P2.600 per kWh compared with the P3.6745 kWh of Napocor
cost.
The WESM was
developed and is operated by a joint undertaking of the
Philippine Electricity Market Corp., the Department of
Energy (DOE) and industry stakeholders and is required
by the Electric Power Industry Reform Act (Epira).
It
fulfills part of the rationale of the Epira due to the
said limited capacity of the government to sustain
future capital requirements for power; nontransparent
power rates fail to show the true cost of power; and the
need to introduce supply competition and customer
choice.
Balintec
explained to Beneco officials that Inec posted the
required prudential requirement that serves as security
payment deposit through the issuance of a standby letter
of credit of P6.8 million based on the Inec monthly
power bill of P70 million, and as time deposit earns an
interest of about P27,000 a month.
Inec
sources of power are Napocor and Northwind (starting
July 2005) from which they buy at 7 percent less than
Napocor price and is value-added tax free, and from the
WESM.
“Inec
has invested about P9 million when they started to
participate at the WESM in 2006… and now has P28 million
in the bank,” said Balintec.
But
trading at the WESM is a challenge consisting of
monitoring prices at lowest cost at which hour steadily.
If one
plays the market well, the benefits can be huge such as
buying power when kWh is at zero price. Balintec said
that this happened in February 2007 when Inec bought 2
million kWh from WESM at zero price. Balintec said,
though there are risks and birth pains involved, once
the co-op has familiarized and learned to trade, there
are also rewards in terms of lower rates.
Learning
to play the WESM trade well redounds to a continuous
reduction of power cost due to the zero price of WESM at
certain hours and sometimes WESM price lower than
Napocor.
Balintec
said the trick lies in knowing at which hours WESM
prices are lower than other sources. Balintec said this
is the compliance of Inec to the Epira rule that a
distributing utility shall supply electricity at the
least cost to its customers within its franchise area.
Under
the Epira, for the first five years from the
establishment of the WESM, distribution utilities shall
source at least 10 percent of its total demand from the
spot market. |
