Meralco: Power consumers to save P5b from 500-MW supply deals

By Alena Mae S. Flores – September 24, 2024, 8:50 pm
from manilastandard.net

Power retailer Manila Electric Co. (Meralco) is seeking the Energy Regulatory Commission’s approval for its power supply agreements (PSA) with San Miguel Corp.’s hydro arm San Roque Hydropower Inc. (SRHI) and ACEN Corp. unit Gigasol3 Inc. which it said would result in nearly P5 billion in savings to consumers.

SRHI and Gigasol3 were declared the winning bidders during Meralco’s competitive selection process held early this year for the supply of 500 MW of mid-merit capacity. SRHI will supply 340 MW, while Gigasol3 will provide 139 MW to Meralco.

Meralco signed power supply agreements (PSAs) with the two companies following the issuance of the notice of award. In separate joint applications to the ERC, Meralco and SRHI said their PSA will result in savings of about P4.8 billion to consumers.

Meralco said SRHI’s delivered rate of P7.10 per kWh (line rental inclusive and VAT exclusive) would be lower by about P3.2260 per kWh than the effective cost of P10.3260 per kWh if the equivalent is to be sourced from the Wholesale Electricity Spot Market (WESM).

“In fact, by sourcing the capacity through the Meralco-SRHI PSA, Meralco’s average blended generation rate will be reduced by about P0.1241 per kWh resulting in savings to consumers of about P4.804 billion,” the joint filing said.

Meralco said if its mid-merit capacity deficit is not addressed by the dry months of 2025 through the grant of provisional authority or interim relief, customers would be exposed to the volatile prices of the WESM.

The distributor said the Meralco-SRHI PSA reflects the most beneficial generation charges with a resultant estimated generation rate reduction of P 0.1241 per kWh.

Meanwhile, Meralco and Gigasol3 said their PSA will result in savings to consumers of about P167 million.

The parties said Gigasol3’s delivered rate of P 8.1819 per kWh (line rental inclusive and VAT exclusive), would be lower by P0.2745 per kWh than the effective cost of P8.4565 per kWh if sourced from the WESM.

Meralco already contracted 1,880 MW of renewable energy capacity from various suppliers—exceeding its initial target of 1,500 MW as part of its long-term sustainability strategy.

Renewable energy is expected to account for 22 percent of Meralco’s supply portfolio by 2030 through its strategic sourcing initiatives.