ACEN Corp. has secured regulatory approval for a 10-year power supply agreement with La Union Electric Co. Inc. (LUECO), strengthening the province’s electricity supply outlook as demand continues to grow.
The Energy Regulatory Commission (ERC) granted provisional authority for ACEN and LUECO to implement the agreement covering between 46 and 97 megawatts of capacity. The order was dated Sept. 23, with the provisional approval intended to prevent LUECO from being exposed to volatile prices in the Wholesale Electricity Spot Market.
The agreement became particularly important after LUECO’s emergency power supply arrangement with ACEN unit South Luzon Thermal Energy Corp. expired on Sept. 25. Without an active supply agreement, the ERC said LUECO would face a deficit covering its power requirements for the remaining months of 2026 and continuing through 2036.
ACEN emerged as the winning bidder in LUECO’s competitive selection process after submitting the lowest calculated responsive bid of P5.9684 per kilowatt-hour. The new agreement is scheduled to begin on Sept. 26, 2026.
During the first year, LUECO is expected to require between 46.23 MW and 62.42 MW of electricity. Its projected requirements are expected to increase over the life of the agreement, reaching between 64.39 MW and 97.38 MW by the 10th year.
The ERC’s provisional approval is designed to provide continuity while the commission continues reviewing the companies’ joint application for final approval. The regulator said the arrangement was necessary because LUECO is not a direct WESM member and therefore cannot independently purchase electricity from the spot market to cover a supply shortfall.
The agreement also has implications for renewable energy compliance. Under the PSA, LUECO will be able to meet its obligations under the country’s renewable portfolio standards, which require electricity suppliers to source a portion of their requirements from qualified renewable energy facilities.
LUECO supplies electricity to consumers across 21 municipalities and one city in La Union, as well as one municipality in neighboring Pangasinan. The scale of its service area makes the continuity of supply important not only for households but also for businesses and other electricity users across Northern Luzon.
The agreement comes as La Union faces broader concerns about electricity prices, reliability and the ability of power infrastructure to keep pace with rising demand. Provincial officials have recently called for discussions involving the power utility, the ERC and other energy agencies amid concerns from households, businesses and investors about supply reliability and rising electricity costs.
For ACEN, the deal adds another long-term power supply arrangement to a portfolio that includes renewable energy projects as well as its involvement in conventional power generation. The company administers the 48-MW-peak Islasol Manapla Solar Power Plant and the 32-MWp Islasol La Carlota Solar Project in Negros Occidental, while also operating and maintaining the 269.96-MW South Luzon Thermal Energy Corp. coal-fired facility in Batangas.
The 10-year agreement also illustrates the growing importance of competitive procurement in securing electricity supply. Rather than relying entirely on short-term arrangements or spot-market purchases, utilities can use longer-term contracts to provide greater visibility over future supply requirements and costs, subject to regulatory approval and the terms of the agreement.
For consumers, the immediate significance is continuity of electricity supply. The longer-term impact will depend on how demand develops, how the agreement performs over its 10-year term and how electricity costs and renewable-energy requirements evolve.
With provisional authority now in place, attention turns to the ERC’s final resolution of the joint application and to how LUECO’s electricity requirements change as La Union’s economy and power demand continue to expand.
