The Energy Regulatory Commission (ERC) has granted final approval to the power supply agreement (PSA) between Camarines Sur IV Electric Cooperative, Inc. (CASURECO IV) and Therma Luzon, Inc., allowing the full implementation of a long-term supply contract covering power deliveries until July 2033.

In a recent decision, the ERC said the PSA, executed after two failed competitive biddings, complied with the Department of Energy’s 2023 Competitive Selection Process (CSP) policy and the Commission’s own CSP guidelines, clearing the agreement for final implementation subject to regulatory conditions.

Therma Luzon, a subsidiary of Aboitiz Power Corp., supplies electricity from the Pagbilao coal-fired power plant in Quezon province. The company began delivering power to CASURECO IV in January 2025 following the ERC’s earlier grant of interim relief.

The Commission noted that Therma Luzon accounted for more than 87% of CASURECO IV’s power supply in the latest billing period reviewed, with the balance sourced from the Wholesale Electricity Spot Market (WESM). The PSA provides for increasing contracted capacity over time, following the expiry of CASURECO IV’s previous contract with the Power Sector Assets and Liabilities Management Corp. (PSALM).

While approving the deal, the ERC flagged that CASURECO IV is projected to have surplus contracted capacity in the coming years if all approved supply agreements take effect. The regulator said any reduction in contracted capacity that results in higher blended generation rates would require prior approval, while increases beyond those specified in the PSA are not allowed.

On pricing, the Commission allowed fuel costs to be passed through to the cooperative subject to a consumption cap, and directed CASURECO IV to verify fuel charges billed by Therma Luzon using supporting documents. The ERC also ruled that penalties or interest arising from late payments under the PSA cannot be passed on to consumers.

The decision further requires Therma Luzon to ensure continuous supply, with no allowance for scheduled or unscheduled outages, and to shoulder the cost of replacement power if it fails to deliver contracted energy.

What are your views on this approval’s implications for cooperative procurement strategies and the role of coal baseload in the Philippines’ energy mix?

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