In line with the approval, the ERC has directed the two parties to file a formal application for approval of the provisions relative to the payments in excess of the fixed capacity stated in the ESA.
Guimelco, in its application, stated that it is presently sourcing all its power from the National Power Corp. (Napocor) thru the 2.9-kilometer, 13.2-kilvolt Guimelco-owned submarine cable from Iloilo City, which has a maximum capability of five megavolt-ampere.
Guimelco said that in the years 1997, 2001 and 2002, the submarine cable sustained damage resulting to prolonged power outages. The longest continuous interruption lasted for more than one month which resulted in the disruption of Guimelco’s electric service to its consumers.
Even at present, during peak hours, voltage drops to lows of 190 volts at load end.
It was further stated that due to the voltage drops and unreliability posed by the submarine cable, there is an urgent need to have an embedded power plant in the island to provide more reliable and continuous power supply.
On June 10, 2004 pursuant to an ERC directive, Napocor issued a certification that it cannot provide the present and future electricity requirements of Guimaras Island considering that the Panay grid, the source of power of the island, is experiencing shortage in generation capacity.
Likewise, the Napocor-Small Power Utilities Group (SPUG) issued a certification to the effect that Guimaras Island is already interconnected to the Panay grid through submarine cable from Iloilo and, as such, it is not covered by the missionary electrification.
Guimelco officials solicited proposals from the various independent power producers (IPPs) for the construction and operation of a power plant in Guimaras. The IPPs that submitted offers include Power One, which submitted an offer to construct a two MW Bunker C-Fired Diesel Power Plant at a cost of P5.19/kWh and TA Oil which offered to put up a 1.4 MW Bunker C-fired power plant at a cost of P4.37/kWh at P10/liter fuel cost.
The ERC noted that the power requirement of Guimelco was initially being supplied by Napocor from the Panay grid through the five-MW submarine cable.
The present ESA between Guimelco and TA OIL involves a power plant composed of two units rated 1.7 MW each or a total installed capacity of 3.4 MW Bunker C-fired power plant.