The Manila Electric Co. (Meralco) has lined up its power requirements—totaling 260megawatts (MW)—that are urgently needed to avert a supply shortage when the Malampaya facility undergoes a 20-day preventive maintenance shutdown next month.
Meralco is eyeing supply deals with state-owned Power Sector Assets and Liabilities Management Corp. (PSALM) for 90MW, Masinloc Power Planters Co. Ltd. (MPPCL) for 120MW, and Panay Energy Development Corp. (PEDC) for 50MW.
According to PSALM President Irene Joy Garcia, the 90MW will come from the Unified Leyte Geothermal Power Plant and Kalayaan Hydroelectric Power Plant.
“If ever the supply contract proceeds, PSALM will source Meralco’s requirement from Unified Leyte,” said the PSALM chief via SMS.
While the 90MW peaking capacity to be contracted from PSALM will no longer have to undergo a competitive selection process (CSP), Meralco First Vice President and Head of Regulatory Management Jose Ronald Valles said, “The DOE [Department of Energy] rules still require us to get exemption from CSP. It’s more of a formality.”
The DOE earlier denied Meralco’s emergency procurement of up to 260MW, which is meant to address the potential shortage resulting from the Malampaya outage and continuing gas restriction, and ensure adequate power supply during the 2022 elections. The DOE suggested that Meralco source its requirements from PSALM.
“We are hoping the DOE will act soonest,” Valles said, adding that the 90MW peaking requirement from PSALM is urgently needed “starting September 26.”
To fill up the 260MW capacity requirement, Meralco will source from MPPCL and PEDC. “We are also asking for exemption from CSP for emergency PSA [power supply agreement] with MPPCL and PEDC,” added Valles.
Meralco’s power contracting strategy, according to the utility firm’s president Ray Espinosa, is to source about 90 percent of its supply requirements for the captive market via bilateral contracts through the CSP program and roughly 10 percent from the Wholesale Electricity Spot Market (WESM).
“And we’ve managed to provide ample supply within our franchise area but when total Luzon is short, then regardless of how well contracted we are, we are affected by the shortage. So, the entire Luzon must work together to help minimize the impact of shortages,” Espinosa said.
He added that the government should also be responsive to the dips in supply, especially during the hottest months. “If we contract capacity for one whole year just to address this dips that happen only in summer, it’s going to be very expensive for the customers because they’ll have to pay for one year’s cost to address only two months of summer.
So, we tend to go to the WESM to pick up that supply. But if WESM is not sufficient, if there is a supply shortage in the WESM, we should be able to and we should be allowed by DOE to contract emergency power supply agreements.”
Meanwhile, Meralco power rates for this month will slightly go up by P0.1055 per kilowatt hour (kWh) to P9.1091 per kWh from last month’s P9.0036 per kWh due to higher generation charge.
This is equivalent to an increase of around P21 in the total bill of a typical residential customer consuming 200 kWh. Generation charge, which makes up about 55 percent of customers’ electricity bills, increased by P0.1117 per kWh to P5.0439 from last month’s P4.9322.
For its August supply, Meralco sourced 36.8 percent of its energy requirements from independent power producers, 53.2 percent from PSAs, and 10 percent from the WESM.
Meralco also said it is extending its no-disconnection policy following the government’s announcement, which placed the National Capital Region, Bulacan, Cavite, Lucena City in Quezon and Rizal under modified enhanced community quarantine.
Meanwhile, PSALM announced that it has concluded with Meralco the negotiated sale of its property in Paco, Manila for P632,162,185.00.
Meralco’s bid offer was higher than the minimum officer price of P527,087,552.00 set by the PSALM Board.
Proceeds will be used to pay for the remaining stranded contract costs and stranded debts of the state-run firm.
