Meralco issues notice of claim vs SMC power unit
By Alena Mae S. Flores – December 12, 2022, 7:05 pm
from manilastandard.net
Power retailer Manila Electric Co. said Monday it issued a notice of claim against San Miguel Corp.’s South Premiere Power Corp. to cover the additional costs it incurred as a result of the 60-day temporary restraining order on their 2019 power supply agreement.
The Court of Appeals issued a notice of resolution and a TRO enjoining the Energy Regulatory Commission and Meralco from implementing the ERC order denying the joint petition filed by SMC Global Power Holdings Corp. subsidiary SPPC and Meralco for temporary relief.
SPPC then announced that it would cease to supply Meralco the 670-megawatt capacity under the PSA starting Dec. 7.
Meralco was forced to source the contract capacity from the Wholesale Electricity Spot Market, the trading floor of electricity.
“Meralco hereby gives notice of its continuing claim against SPPC for the price difference between the WESM price and contract price under the PSA, to which Meralco would be exposed during the effectivity of the TRO or writ of Injunction if any is issued, in addition to all applicable fines, penalties and liquidated damages under the PSA in the event that the Court of Appeals eventually resolves the main case denying the Petition for Certiorari and/or claim of SPPC,” Meralco said in its Dec. 12 letter to SPPC.
Meralco asked SPPC to pay the price difference between the contract price and the WESM price. The power retailer has yet to divulge the amount it is claiming from SPPC.
Meralco’s contract price with SPPC was priced at P4.30 per kWh, while WESM supply averaged P8 to P8.50 per kWh.
ERC last week estimated the price impact of Meralco securing supply from the WESM at about P0.30 to P0.40 per KWh, or an average of P80 for those consuming 200 kilowatt-hours a month.
Meralco said the impact might not be as much, as SPPC’s cessation of supply did not cover a full month and WESM prices could still go down on lower demand during the holidays.
The company said it was exhausting all efforts to protect its customers from potentially higher generation costs while ensuring continuity of stable, reliable, and least-cost power under the current circumstances.
Meralco is evaluating offers from the 1,336-MW GNPower Dinginin Ltd. Co. in Bataan and San Miguel’s 1,200-MW Ilijan natural gas plant in Batangas to replace the SPPC supply and move away from the WESM where prices are volatile.
“They have different rate structures, so we need to evaluate them together to see what’s the best that will lead to the lowest cost,” Meralco head of utility economics Lawrence Fernandez said.
He said WESM supply assures continuity of service, but the company is trying to find the least cost.
Fernandez said the Department of Energy already issued the certificate of exemption from the competitive selection process, thus allowing Meralco to negotiate with suppliers.
