Aboitiz Power may bid for Meralco Supply
By Bernie Cahiles-Magkilat – November 1, 2022, 2:47 PM
from Manila Bulletin
Aboitiz Power Corp., one of the country’s leading power producers, may participate if the planned bidding for Meralco’s supply power requirement will push through stating it has excess capacity.
Emmanuel “Manny” V. Rubio, president and Chief Executive Officer of Aboitiz Power Corporation, told journalists covering the launch of the Aboitiz Data Innovation in Singapore they can participate in the planned Competitive Selection Process (CSP) of Meralco.
“It will be up for Meralco, but we can participate because we have excess capacity,” Rubio said. Easily, he said, Aboitiz Power can supply 300 MW.
In terms of pricing, Rubio said this will depend on the cost of coal they can procure.
“Depends on how much you are buying coal and we’re trying to buy cheap coal,” he said. He also added that all their fixed rates are hedged and are expiring. This is the reason they did not participate in the 2019 Competitive Supply Procurement (CSP), which has a ten-year contract.
It could be recalled that SMC Global Power Holdings Corporation (SMCGP) of the San Miguel group served notices of termination for its Power Supply Agreements (PSA) with Meralco in August this year. The PSA includes the power capacities supply from Ilijan gas-fired (670 MW) and Sual coal-fired (330MW) power plants. The ten-year power supply contracts were signed in 2019 and will be enforced until 2029 with fixed rate of P4.4017 kilowatthour for San Miguel Energy Corp. and P4.0459 per kwh for South Premier Power Corp. contracts.
But SMC sought for a P0.30 per kilowatt hour rate hike petition before the Energy Regulatory Commission (ERC) citing high cost of fuel and natural gas restrictions that caused them P15-billion loss.,
The ERC, however, denied the price hike petition. In its 40-page decision on Sept. 29, ERC said “As the regulatory body of the power industry, the Commission finds it necessary that applicants be reminded of their obligations under the PSA (power supply agreement) which they have entered into voluntarily. More importantly, the Commission emphasizes the responsibilities of Meralco under Republic Act No. 9136 and its franchise, as a distribution utility, to provide electricity to its consumers in the least cost manner.”
ERC said the SMC cannot invoked the high cost of fuel and gas restrictions as “change in circumstance” given the fixed price” term of the agreed rates.
ERC even noted that the PSAs between Meralco and SMC stated that once the SMC plants would cease supplying the capacities specified in its contract with Meralco, the supplier will be liable for the payment of liquidated damages that shall be equivalent to P100,000 per megawatt per day of the contract capacity for the remaining term of the agreement.
Following the ERC decision, Meralco announced it will be seeking new offers for emergency power supply agreements (EPSAs) to contract 1,000 megawatts of capacity to plug supply gap following SMC’s decision.
