The Energy Regulatory Commission (ERC) has provisionally approved the power supply agreement (PSA) underwritten by the Batangas II Electric Cooperative (BATELEC II) with Bac-Man Geothermal Inc. (BGI), which is a subsidiary company of the Lopez-led Energy Development Corporation.

The regulatory body said the approval of the PSA had been intended to “ease the power interruptions within (BATELEC II’s) franchise area” which had been protractedly tormented with power service interruptions.

As culled from the approved formula for the supply deal, the applicable tariff that must be passed on to the customers of the Batangas power firm shall be at P4.3767 per kilowatt hour.

“This will serve as additional capacity to secure more stable, reliable and efficient source of power supply for a term of nine years, as well as at a reasonable rate,” the industry regulator noted.

According to ERC Chairperson Agnes T. Devanadera, the interim approval of the power supply pact “will result in a positive development in the energy supply chain in BATELEC II’s franchise area.”

She emphasized “this will provide some relief to BATELEC II’s customers as their power supply will be augmented, which will mean a more stable electricity.”

Nevertheless, if the final determination of the rate for the PSA will end up lower, Devanadera specified that “the amount corresponding to the reduction shall be refunded by BGI to BATELEC II - which shall thereafter be refunded to its member-consumers by crediting the same in their electric bills over a period to be determined by ERC.”

Meanwhile, the PSA stipulated that the source of supply shall be renewable energy; and any procurement of replacement power shall also be anchored on the PSA-approved power rate.

“The provisional approval is necessary in view of the fact that this will be used by BATELEC II in its compliance with the requirements of the Renewable Portfolio Standards (RPS) for on-grid areas,” the ERC stated -- and that is primarily referenced on a policy requiring distribution utilities and electric cooperatives to source prescribed percentage of their supply from renewable energy-generated capacities.

The regulatory body similarly allowed BATELEC II “to reduce its contract capacity and contracted energy,” as long as this will be hinged on “a buyer’s disconnected customer.”

The ERC further directed the parties-in-interest “to comply with the efficient utilization of the contracted capacity from BGI -- bearing in mind its obligation to supply at least cost, and for BATELEC II to share 50-percent of the availed prompt payment discount (PPD) to its member-consumers to reduce their electricity bill.”

The decision of the ERC likewise decreed that “interest or penalty and any other charges incurred by BATELEC II shall not be allowed to be passed-on to its member-consumers, and that the final generation cost that can be recovered by BGI and the contract capacity by BATELEC II, including all the evidence submitted, shall be reviewed and evaluated by the Commission in its final resolution of the instant application.”