Meralco denies ‘midnight power deals’ with ERC

By Marc Jayson Cayabyab – July 04, 2017 07:11 PM

from Philippine Daily Inquirer

The Manila Electric Company (Meralco) on Tuesday denied allegations that it obtained favored power supply deals from the Energy Regulatory Commission (ERC) which was accused of granting “midnight deals” to the distribution utility.

During the House of Representatives inquiry into the alleged midnight deals for Meralco, Meralco regulatory management office head and first vice president Ivanna Dela Peña said the seven power supply agreements (PSA) submitted to the ERC for approval were intended to provide the cheapest cost of electricity.

She said Meralco’s power supply agreements intend to shield consumers from higher prices at the Wholesale Electricity Spot Market (WESM).

“The seven long-term PSAs filed before the ERCs on April 29 are not midnight deals… These PSA’s were executed to shield customers’ price spikes in the WESM. They represented the least cost among all offers received by Meralco,” Dela Peña said.

Dela Peña also said the ERC’s extension of the deadline for the competitive selection process (CSP) allegedly intended to accommodate Meralco also benefitted other electric cooperatives and private distribution utilities.

Dela Peña said the power supply agreements with generating companies started way back 2012 and filed before the ERC in April 2016.

“The seven long term power supply agreements are not midnight deals. Discussion with power project components started as far back as 2012. These PSAs were executed to ensure lower cost power for customers and to shield customers from price rise in the WESM,” Dela Peña said.

The ERC is accused of extending the deadline for compliance of the competitive selective process (CSP), a competitive power procurement process for distributors, allegedly to accommodate Meralco.

Under the CSP, distribution utilities may execute a power supply agreement with a generation company after complying with the requirements.

The distribution utility is required to open the bidding from generation companies to ensure the least cost of electricity.

The ERC will not allow distribution utilities to file applications for PSA without complying with the CSP requirements.

Meralco on April last year filed with the ERC for approval its PSAs with the two subsidiaries of Meralco Powergen Corp. (MGen) – Redondo Peninsula Energy, Inc., and Atimonan One Energy, Inc.

But ERC extended the deadline to comply with the CSP until April 30, allegedly to accommodate Meralco, who submitted the seven PSAs a day before the deadline.

Meralco legal corporate head and first vice president Will Pamintuan said the approval of these PSAs underwent a “rigorous process” taking several months, and not just four days as claimed by critics who alleged the PSAs were signed only on April 26, days before the new deadline.

“We complied with all the legal requirements in filing these seven PSAs,” Pamintuan said.

ERC Commissioner Alfredo Non denied extending the deadline to accommodate Meralco.
He said the deadline was extended in response to questions on the possible effect of the CSP on existing power supply agreements, which may culminate to legal questions filed before the court.

“In reviewing the letter inquiries of industry participants, we believed then that there were legitimate concerns if ignored could result in the questioning of resolution in the courts or as temporary restraining order,” Non said.
Non said the extension of the deadline allows for a “flexible” implementation of the competitive selective process.

“Therefore, considering the above discussions, it’s quite clear the ERC action to restate the effectivity date would result in a more flexible and timely implementation of the CSP rule,” he said.

Non said the ERC has only accepted the power supply applications and it does not mean these are approved already.

“The ERC at that time only accepted applications… Acceptance of the application does not mean it has guarantee of approval,” Non said.