ERC approves Meralco, PFBS supply agreement

By Lenie Lectura – June 27, 2019
from Business Mirror

THE Energy Regulatory Commission (ERC) has approved the long-term power supply agreement (PSA) between the Manila Electric Co. (Meralco) and the PowerSource First Bulacan Solar Inc. (PFBS).

“The joint application filed by Meralco and PFBS for the approval of their PSA is hereby approved,” said the ERC in its 67-page decision. The regulator approved the PSA application because this “will be beneficial to Meralco’s consumers by way of reliable, continuous and efficient supply of power within its franchise area at reasonable costs.”

Under the approved PSA, PFBS will supply Meralco 50 megawatts (MW) for P4.69 per kilowatt hour (kWh), subject to 2-percent annual escalation.

PFBS will source power from its proposed solar-plant site located in San Miguel, Bulacan. The project costs P3.95 billion.

The rate, the ERC said, is “reasonable” because the PSA underwent the competitive selection process (CSP). Even with the application of the 2-percent annual escalation, the rate of P4.69 per kWh is “still significantly lower than the prevailing feed-in-tariff (FiT) rate and most of the approved rates for solar power plants.”

From P4.69 per kWh, the rate will go up to P5.7516 per kWh on the 20th year. The ERC said this is still lower than the prevailing FiT rate of P8.69 per kWh for solar.

The ERC told Meralco it cannot pass on to consumers any additional charges due to interest rates or penalties imposed by PFBS under the PSA. It, however, allowed Meralco to pass on to its consumers any benefit it availed of from excess energy of the PSA.

The 20-year term of the PSA will not be extended, the ERC said.

Meralco was also directed to submit the monthly generation rate and its audited financial statements.

The decision was dated February 28 this year but was only approved for posting this month.