Meralco, Aboitiz unit seek nod for power supply deal

BY LENIE LECTURA – APRIL 20, 2023
from Business Mirror

The Manila Electric Co. (Meralco) and Aboitiz-led GNPower Dinginin Ltd. (GNPD) have filed applications for approval of their emergency power supply agreements (EPSA).

“It respectfully prayed that the Honorable Commission, after hearing on the merits, render a decision approving the Meralco-GNPD EPSA and the terms and conditions thereunder, including the price,” Meralco and GNPD said in two-separate applications filed with the Energy Regulatory Commission (ERC).

The applications involved a 300-megawatt (MW) baseload EPSA that partially replaced the 670MW power supply agreement (PSA) with San Miguel Corp.’s South Premiere Power Corp. (SPPC).

The EPSA took effect on December 15, 2022 and ended on January 25. It has an “effective” rate of P5.96 per kWh and a “delivered” rate of P6.40 per kWh, which is lower by about P2.82 per kWh than the effective cost of P9.23 per kWh if the capacity was sourced from the Wholesale Electricity Spot Market (WESM).

“In fact by sourcing the capacity through the Meralco-GNPD PSA, Meralco’s average blended generation rate will be reduced by about P0.2268 per kWh,” they said in their application.

The EPSA was extended for another 30 days from January 26 to February 25. However, the rate for the second round of EPSA was higher. Their joint application stated that the effective rate stood at P7.62 per kWh and the delivered rate was P8.14 per kWh, which is lower by about P0.5119 per kWh than the effective cost of P8.65 per kWh, if the equivalent capacity under the said PSA is to be sourced from the WESM.

“In fact, by sourcing the capacity through the Meralco-GNPD February PSA, Meralco’s average blended generation rate will be reduced by about P0.0396 per kWh, resulting in savings of about P84.7 million,” their application stated.

In February, Meralco was asked why it agreed to a much higher rate. Meralco First Vice President Jose Ronald Valles said SPPC has no rate offer then and that the negotiations for an EPSA extension took place before the grant of the Writ of Preliminary Injunction (WPI) sought by SPPC.

“Our comparison is between GNPD and WESM since there were no other suppliers willing to supply to Meralco for that period. Before we signed the EPSA extension with GNPD, our forecast of WESM price is higher than GNPD’s offered tariff,” Valles said.

The grant of WPI suspended the continued implementation of Meralco-SPPC PSA but does not terminate the same. This is to allow the parties to negotiate the terms of the PSA. The Court of Appeals directed the parties “to enter into good faith negotiations,” Associate Justice Mary Charlene Hernandez-Azura said in an 8-page order promulgated last January 25.