ERC asked to scrutinize terms of Meralco auction
By Lorenz S. Marasigan – July 22, 2024
from Business World
The Energy Regulatory Commission (ERC) was urged on Sunday to temporarily halt the Manila Electric Co.’s (Meralco) auction for an additional 600 megawatts (MW) of power, with a lawmaker calling the competitive election process (CSP) “discriminatory.”
Senator Alan Peter Cayetano said the regulatory body should suspend the CSP to reassess the fairness of the terms of reference (TOR), claiming it appears to be “tailor-fit for the utility’s favored suppliers.”
He specifically cited a portion of the CSP that limits the age of the power plant to not “more than 10 years old” to be eligible to join the auction. This he said disqualified Malampaya-fueled plants from the process.
“If all of us are saying it should be the cheapest, and we’re also saying there should be a mix and we should use our own resources, but they always lose in the bid or are not allowed to bid even though there is supply, why would foreign investors come in to dig more wells for indigenous gas?”
Cayetano’s appeal comes amid ongoing discussions about the high cost of electricity in the Philippines, which he noted continues to burden both investors and consumers.
“This is not only about the high cost of power but it’s also about energy security.”
According to its website, Meralco is seeking bids for 600 MW of power for August 2025. The bid submission deadline is set for August 2.
Meralco VP and Head of Corporate Communications Joe R. Zaldarriaga defended the CSP process, saying that eight companies, including those sourcing fuel from Malampaya, have expressed interest.
These are: First Gas Power Corp., First NatGas Power Corp., Mariveles Power Generation Corp., Masinloc Power Co. Ltd., GNPower Dinginin and Therma Luzon, Inc., Southwest Luzon Power Generation Corp. and Quezon Power (Philippines) Limited Co.
“Any generation company can submit offers for these CSP. While we prioritize power plants using indigenous fuel as required by DOE, we ensure that it will not violate our least cost mandate under the law. There is no preferential treatment and Meralco always awards the contracts to the lowest compliant bidder,” Zaldarriaga said.
He said the CSP, as mandated by the government, ensures that only power suppliers offering the least cost are contracted. Zaldarriaga assured that Meralco strictly adheres to the Department of Energy (DOE) and ERC-approved CSP guidelines.
“Just like all our other CSPs, we are hoping that all these companies will submit their offers to maximize competition. This will allow us to secure the best bid and least-cost supply that will really benefit our customers. We emphasize that Meralco does not amend the rules or TORs for our CSP to favor one generation company or limit competition because that is obviously discriminatory and anti- competitive.”
Meralco last week announced that it successfully secured bids for 500 MW of renewable energy supply through a CSP, with San Roque Hydropower Inc., Gigasol3 Inc., and Santa Cruz Solar Energy Inc. presenting attractive offers.
