Meralco bid to exempt deals from CSP rejected

The Department of Energy (DOE) has denied the request of the Manila Electric Co. (Meralco) to exempt its power supply agreements (PSAs) with Masinloc Power Partners Co. Ltd. (MPPCL) and Panay Electric Development Corp. (PEDC) from competitive biddings.

These PSAs were supposedly meant to address the potential shortage resulting from Malampaya outage and continuing gas restriction, and for Meralco to be able to secure adequate supply up to the national and local elections next year.

“They denied our request. They said there will be no shortage,” Meralco First Vice President and Head of Regulatory Management Jose Ronald Valles said in a text message Thursday.

Meralco earlier asked the DOE to exempt its 120MW PSA with MPPCL and 50MW PSA with PEDC from the competitive selection process (CSP) and approve these as emergency PSAs instead.

Valles said Meralco has no other choice but to comply with DOE. “It will be their ultimate responsibility anyway,” he said, adding that if and when power supply becomes thin next year, “We just have to tell everyone that we saw it coming and did everything we could to address it.”

DOE officials have yet to respond to a request for comment as of press time.

The PSAs with PEDC and MPPCL are part of the 260MW power supply requirements that Meralco urgently needed to avert possible supply shortage. The remaining 90MW capacity requirement was sourced from the Power Sector Assets and Liabilities Management Corp. (PSALM).

Meantime, Meralco will just have to contend with what it has now. “We will optimize existing supply sources, including the 90MW contract for the supply of electric energy with PSALM,” said utility economics head Lawrence Fernandez.

Last week, Meralco announced that power rates this month inched up by only P0.0283 per kWh to P9.1374 per kWh from last month’s P9.1091 on account of higher transmission charge. This is equivalent to an increase of only around P6 in the total bill of a residential customer consuming 200 kWh.

Transmission charge for residential customers increased by P0.0282 per kWh to P0.7085 per kWh from P0.6803 due to higher ancillary service charges, which accounted for about 33 percent of the National Grid Corporation of the Philippines’s (NGCP) total transmission costs.

The increase in overall rates was partly tempered by Meralco’s continued implementation of the Distribution Rate True-Up refund which began in March. The refund rate for residential customers is at P0.2761 per kWh and appears in customer bills as a line item called “Dist True-Up.”

The October generation charge, meanwhile, registered a slight reduction of P0.0004 per kWh to P5.0435 from P5.0439 per kWh in the previous month.

Lower average capacity on outage and average demand in the Luzon grid in September pulled down charges from the Wholesale Electricity Spot Market (WESM) by P1.2061 per kWh. The share of WESM to Meralco’s total requirement was higher at 13.4 percent during the month.

Charges from Independent Power Producers (IPPs), which decreased by P0.0527 per kWh, also contributed to the generation charge reduction. The cost of using alternative liquid fuel during the Malampaya gas supply restriction in September was not yet included in the charges and will be billed in subsequent months.

Charges from PSAs went up by P0.3156 per kWh to P4.9417 per kWh from the P4.6261 per kWh largely due to higher fuel prices and the peso’s depreciation.

IPPs and PSAs accounted for 37.1, and 49.5 percent, respectively, of Meralco’s energy requirement.

Meralco’s disconnection activities remained suspended in Bulacan, Cavite, Laguna, Rizal and Lucena City in Quezon, which are still under modified enhanced community quarantine (MECQ), from October 1 to 15.

Also covered by the suspension are areas in National Capital Region that were placed under granular lockdown by their respective local government units until October 15.