Meralco gets 1,220MW offered supply capacity
By Lenie Lectura – July 3, 2024
from Business Mirror
THE Manila Electric Co. (Meralco) received six offers for the supply of its 400 megawatts (MW) of mid-merit requirement.
“By yesterday’s deadline to express interest to participate in the 400MW mid-merit CSP (Competitive Selection Process), Meralco’s BAC (Bids and Awards Committee) received an aggregate offered capacity of 1,220MW from six interested bidders,” said Meralco utility economics head Lawrence Fernandez via Viber.
With mid-merit power supply, the gap between baseload and peaking plants is filled. Baseload supply is mostly sourced from coal power plants that must run 24-hours a day while peak power is required when demand is at its highest.
Meralco Senior Vice President and Head of Regulatory Management Jose Ronald V. Valles earlier said the CSP involves a 15-year power supply agreement (PSA), which is targeted to start on August 26, 2025.
“This is open to brownfield or greenfield,” the Meralco official said.
Meanwhile, the Power for People Coalition (P4P) has filed a petition at the Energy Regulatory Commission (ERC) seeking to deny Meralco’s power supply contracts with four fossil fuel plants. The organization believes granting the contracts will result to more expensive electricity.
Meralco earlier initiated a bidding process that awarded contracts worth three gigawatts (GW) to fossil fuel plants.
“The terms of these power contracts are unfavorable to consumers and small businesses,” P4P Convenor Gerry Arances was quoted as saying in a statement. “Everyone loses except big power players.”
Corporate greed
THE contracts allegedly allow the plants to automatically pass on fuel costs to consumers, which is against the “least-cost” provision of the Electric Power Industry Reform Act (Epira).
“This is precisely what Sanlakas [party-list organization] warned about two decades ago when Congress railroaded Epira under the guise of preventing another energy crisis,” said Sanlakas Secretary-General Atty. Jose Aaron M. Pedrosa Jr. “Privatization inspires corporate greed and these contracts are further proof that these generation companies will willingly throw consumers under the bus to protect their bottom lines.”
The P4P and Sanlakas argued that the terms of the contracts are anti-competitive in the first place, deliberately keeping out renewable energy projects from entering.
According to Pedrosa, the terms of reference of the contracts set energy requirements, technical parameters and minimum capacity offers “that clearly favor big fossil fuel players.”
“That’s already too many red flags for the ERC to ignore,” he added.
Arances said they are asking the ERC to “reject these contracts as part of their responsibility of protecting the public.” “Otherwise, they will condemn a new generation of consumers to 15 years or more of expensive power,” he added.
Claims ‘baseless’
HOWEVER, Meralco has rejected the “baseless” claims made by the P4P that its power supply contracts are unfavorable to consumers.
The privately-owned utility firm said “it is committed to sourcing the least-cost available supply through, among others, the conduct of a transparent CSP.”
“We strictly observe and follow the requirements and standards set by the government, which includes securing prior approval from the Department of Energy (DOE) of our Power Supply Procurement Plan and the corresponding Terms of Reference (TOR) of the CSPs,” according to Meralco.
In addition, these TORs also considered suggestions of the Energy Regulatory Commission (ERC) Chairperson before they were published,” Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga said.
Ultimate goal
ZALDARRIAGA explained that the CSP involving the 1,200MW baseload PSA was awarded to South Premiere Power Corp. (SPPC) after it submitted the lowest bid of P7.0718 per kilowatthour (kWh). SPPC’s bid bested the P7.1006 per kWh offer of the joint venture of Limay Power Inc. and San Roque Hydropower Inc. for 150MW capacity. SPPC also bested the bid by First Natgas Power Corp. of P8.4489 per kWh, which was deemed non-compliant as the offer went beyond the reserve price set for the bidding.
For the 1,800-MW CSP, Meralco secured the best bids from three generation companies. GNPower Dinginin Co. Ltd., Mariveles Power Generation Corp. and Excellent Energy Resources Inc. offered P6.8580 per kWh (300 MW), P6.9971 per kWh (300MW) and P7.1094 per kWh (1,200MW), respectively.
“The CSPs involve an open and competitive process with the ultimate goal to secure the lowest bid from qualified generation companies, with no preferential treatment,” Zaldarriaga said. “Thus, the allegations that contracts emanating from CSPs are anti-competitive have no basis.”
Previous CSPs of Meralco are also proof of transparency as these are required to comply with the policies of the DOE and rules of the ERC.
“We would like to assure our customers that all power supply contracts resulting from our CSPs undergo a strict review and approval from the ERC before being implemented to ensure that rates are fair and reasonable,” Zaldarriaga said.
