Meralco power supply deal piques interest of 18 firms
By Lenie Lectura – November 25, 2020
from Business Mirror
Power lines run beside a sign for the Manila Electric Co. (Meralco) Makati branch in Manila, the Philippines, on Monday, March 23, 2009. Manila Electric Co. is the largest Philippine power retailer.
The Manila Electric Co. (Meralco) has received a total of 18 Expressions of Interest (EOIs) to join the competitive auction for its 1,800megawatt (MW) power requirements in 2024 and 2025.
Meralco utility economics head Lawrence Fernandez said the 18 EOIs were submitted by several power firms with offered capacity totaling 6,050MW, utilizing a variety of technologies.
“The Third Party Bids and Awards Committee (TPBAC) met last November 19 and the TWG (Technical Working Group) reported to them that 18 EOIs were submitted by the extended deadline of November 13. These represented an aggregate offered capacity of 6,050MW,” said Fernandez.
Last month, Meralco said it received 9 EOIs with a total offered capacity of 3,600MW.
“While most of the EOIs were submitted by existing participants in the Philippine power sector, the TPBAC also received submissions from companies that will be new to the industry,” Fernandez said without identifying the firms that joined, citing non-disclosure agreements.
Among the power firms that have verbally indicated their interest to participate in the CSP in the past are Atimonan One Energy, Inc. (A1E), a wholly-owned subsidiary of Meralco PowerGen Corp. (MGen); San Miguel Corp.’s power unit; Consunji-led Semirara Mining and Power Corp. (SMPC); Aboitiz Power Corp.; and possibly Ayala Corp.
The winning bidders will secure a 20-year power supply agreement (PSA) with Meralco.
The bidders are to submit their technical proposals on January 25, 2021. Only then will Meralco know what type of technology the bidders will utilize for their bids.
“In terms of technology, the submissions came from companies that have developed and/or operated a variety of fuel types, including coal, natural gas, and renewable energy. But we will only know for certain once the bidders submit their technical proposal next year. We would not want to speculate at this point on the potential offers of the interested bidders,” said Fernandez.
The TPBAC is now preparing for the pre-bid conference on December 17. Meralco already sent invitations to the Department of Energy (DOE) and Energy Regulatory Commission (ERC) to nominate their observers to the pre-bid conference. The TPBAC will also be waiting for written questions from interested bidders, which may be addressed on the same day.
“ERC has formally declined the invitation to send observers. This is similar to the past CSPs of Meralco. The ERC said that they cannot participate in the process as they will be reviewing the resulting PSAs that will be submitted to the commission. We are waiting for the DOE’s list of observers,” added Fernandez.
Meralco noted that this round of CSP has solicited more interest compared to the previous competitive auctions. “The current CSP gained much more interest compared to all our prior CSPs in 2019. In general, more participants would lead to a more competitive bidding process,” he said.
Last year, Meralco conducted three CSPs. These are the 1,200-MW baseload capacity starting 2020, 500MW mid-merit starting 2020 and the 1,200-MW baseload starting 2024.
In the latest bid invite, Meralco said it would need 1,200MW by December 2024 and 600MW by May 2025.
A bidder can offer at least 150MW. If the total capacity offer goes beyond 1,800MW, the bidder that fills up the last stack shall have its offer reduced. The price offers must not go over than the pre-determined reserve price, which would only be revealed during the opening of the bids scheduled on January 25, 2021.
Meralco prefers baseload plants or those that continuously run on a 24/7 basis. These power facilities should be in commercial operation not earlier than January 2020 but no later than May 2025. The scheduled outage allowance (OA) and forced OA of the plants that will offer to supply Meralco should not exceed 30 days and 15 days, respectively.
After interested bidders have turned in their EOI, they are no longer allowed to reduce their offered capacity but may increase this until January 18, 2021.
