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An emergency power supply agreement (EPSA) between La Union Electric Cooperative Inc. (LUELCO) and GNPower Kauswagan Ltd. Co. (GNPK) is under review by the Energy Regulatory Commission (ERC).
La Union Electric Cooperative, Inc. (LUELCO) services 24 locations, including 23 municipalities and one city. Four of these municipalities are in Pangasinan, while the remaining 20 are in La Union.
Meanwhile, GNPK is a power partnership between ACEN Corp., Ayala Corp.’s energy division, the Philippine Investment Alliance for Infrastructure fund, and Power Partners Ltd. Co.
The review aims to confirm adherence to regulations and prevent any potential effects on electricity pricing.
The EPSA sets the power supply rate at P6.0069 per kilowatt-hour (kWh) from GNPK, with variations based on fuel costs and exchange rates. The agreement seeks to maintain stable generation rates for LUELCO and minimize the impact of spot market price spikes, which had hit P23.86 per kWh before the EPSA was implemented.
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Proper procurement process
According to the ERC, LUELCO was directed to release public notices and file required documents, such as rate impact assessments and proof of delivery to local government offices, the Solicitor General, and congressional energy panels.
The most favorable terms were offered by GNPK, said LUELCO, following consultations with energy stakeholders and a bidding process among potential suppliers. The cooperative’s board gave the green light to the agreement, and power delivery started on 18 November 2024.
Hearings via video conference are set for April 24 and 30 to review the agreement’s regulatory compliance and its effect on power rates.
Last December, LUELCO was among several electric cooperatives (ECs) that received show-cause orders from the National Electrification Administration (NEA) for allegedly not complying with transparency requirements. The group also included ECS from Ilocos Norte, Ilocos Sur, Pangasinan, Benguet, Kalinga-Apayao, Mountain Province, and Sorsogon 1.
NEA stated that the ECs were ordered to explain the questionable steps taken during the competitive selection process (CSP) for acquiring a combined 130 megawatts (MW) of power. The ECs had planned to jointly conduct the CSP to cover their short-term electricity needs from 2022 to 2025 within their service areas.
The joint bids and awards committee declared two failed bidding rounds in 2022 after bidders failed to meet the set requirements. This led to direct negotiations, allowed under DOE and NEA rules, but the ECs continued dealing only with the same unsuccessful bidders.
NEA said the group of cooperatives had already issued a notice of award for the project without informing the agency, even after being questioned for negotiating with bidders who had failed to meet the project’s requirements.
This prompted NEA Administrator Antonio Almeda to order the group officers to explain why they shouldn’t face administrative charges for violating rules on proper and transparent procurement and awarding of the project.
“The administrator stressed that fairness and transparency in the selection process for the benefit and protection of the member-consumers should prevail,” the agency said.
As of writing, there have been no publicly available updates regarding this issue.
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Fast-tracking power agreements
An EPSA is a short-term contract between utilities and power producers to ensure reliable electricity during shortages or delays. EPSAs act as backup plans to address supply issues and stabilize rates, typically lasting up to a year for flexibility.
Last March, the Energy Regulatory Commission (ERC) began fast-tracking the approval of power supply agreements (PSAs) to reduce ECs’ reliance on the Wholesale Electricity Spot Market (WESM) ahead of the summer season.
“So that even if we’re entering the summer months… even if the WESM prices spike, their consumers can be insulated from the increase because they are charged under the power supply agreements,” said ERC Chairperson Monalisa Dimalanta.
In February, the Independent Electricity Market Operator of the Philippines (IEMOP), which operates WESM, warned of rising spot market prices, citing expected higher demand during the dry season.
Benguet Electric Cooperative (BENECO) also recently signed an EPSA last February. The five-month deal with GNPower Dinginin Ltd. Co. (GNPD), running from February 26 to July 25, 2025, covers 73 MW.
Need for reliable power
The National Grid Corp. of the Philippines (NGCP) is advocating for the development of additional baseload power plants to address the anticipated demand surge during the upcoming summer months, following March’s unexpected yellow alert.
NGCP spokesperson Cynthia Alabanza noted, “From a grid management perspective, it’s really better to have baseload power or non-intermittent, non-variable sources.”
In contrast to solar and wind, which rely on weather conditions, baseload plants provide a constant, uninterrupted power supply.
“Although we encourage that because it’s clean energy, solar power, by nature, has a relatively low capacity factor,” Alabanza explained. “This is because there’s no solar energy at night and when it’s cloudy, (so) the output drops.”
On March 5, the Luzon grid was on yellow alert for two hours due to higher demand and unplanned power plant outages. The following day, March 6, saw the highest peak demand of 12,467 MW for 2025, surpassing the forecasted 11,870 MW by 5%, according to NGCP data.
Alabanza stressed, “We will lay out all possible solutions and have a contingency plan in place to avoid disturbances in the transmission system and electricity supply.”
Sources:
https://tribune.net.ph/2025/03/09/erc-reviews-la-union-emergency-power-deal