DOE allows posting of new TOR for 2nd round of Meralco’s CSP
By Lenie Lectura -February 21, 2020
from Business Mirror
THE Department of Energy (DOE) has given the Manila Electric Co. the green light to proceed with the publication of the revised terms of reference (TOR) for the second round of the competitive selection process (CSP) involving 1,200 megawatts (MW) of new capacity.
“And finally, there was a meeting of the minds already. I think it will be published. They asked for authorization to publish and we’ve given it,” Energy Secretary Alfonso Cusi told reporters in an ambush interview on Thursday.
Meralco is seeking bids via competitive bidding for its 1,200-MW capacity requirement by 2024. The first CSP was declared a failure after only Atimonan One Energy Inc. of Meralco PowerGen Corp. submitted a bid. MGen is the power-generation arm of Meralco.
Thereafter, the DOE told Meralco to revise the TOR so more power firms can participate. Meralco relaxed some of the bid rules in order to accommodate more participants.
Among the DOE recommendations include stacking of capacity of several power plants to meet Meralco’s 1,200-MW supply requirement and allow not only greenfield power plants, but include merchant plants as well.
“Well, tinaggap nila [they accepted it],” referring to the agency’s recommendations, which include any power plant to contract or sell only a part of its capacity to Meralco. “We want it to be transparent. We want to invite more participants. We don’t want it to be restrictive,” replied Cusi when asked why the DOE was pushing for a revision of the TOR.
Greenfield power plants are those power projects that would be built from scratch. Merchant plants are power facilities without an approved power supply agreement (PSA). The output of merchant plants is traded at the electricity spot market.
“We’re encouraging merchant power plants. Let’s allow them to participate. Our policy is that we have been encouraging merchant power plant,” said Cusi.
When sought for comment, Meralco utility economics head Lawrence Fernandez said the new bidding dates would be finalized when the bid committee members convene soon.
“Yes, we received DOE’s letter. For publication, we just need to convene the TPBAC (Third Party Bids and Awards Committee) and formally obtain their approval to publish. We also need to confirm their availability to set the schedules for the Pre-Bid Conference and the Opening of Bids. These dates will be part of the Invitation to Bid to be published,” said Fernandez in a text message.
Conglomerate San Miguel Corp. (SMC) earlier expressed keen interest to participate in the CSP, while Ayala Corp. said it was reviewing the amended bid rules.
“Yes, we will bid,” SMC President Ramon S. Ang replied in a text message when asked if the power unit of SMC will participate in the competitive bidding.
Ang has been telling Meralco to allow other power plants to join the bidding because the original bid rules meant for greenfield power requirement were stringent.
Previously, Meralco’s TOR allow power plants utilizing high-efficiency, low-emission technology.
Mariveles Power Generation Corp., a joint venture between SMC Global Power Holdings Corp. and MGen, withdrew from the first CSP because the power plant that would join the auction is a circulating fluidized bed (CFB) coal-fired power plant.
Another power giant that is expected to join the second round of CSP is AC Energy.
“We are reviewing it,” said AC Energy President Eric Francia in a text message. “I hope this CSP succeeds as we need additional capacity soon.”
AC Energy and SMC previously won in two other competitive biddings for Meralco’s 1,200-MW brownfield and 500-MW capacity requirement.
