The Manila Electric Co. (Meralco) and two subsidiaries of SMC Global Power Holdings Corp. are seeking approval from the regulators to implement their power supply agreements (PSAs) that were successfully bidded out recently.
If approved, savings to consumers will amount to a total of 20.93 billion if these power supply contracts are implemented.
Meralco received “best” bids from Excellent Energy Resources Inc. (EERI) and Masinloc Power Partners Co. Ltd. (MPPCL) for the supply of 1800megawatts (MW) of power. The parties have executed power supply agreements last March 2 but these need to be approved by the Energy Regulatory Commission (ERC) before the contracts take effect.
Under the PSA between Meralco and EERI, the latter will supply the utility firm 1,200MW starting December 2023 at a levelized cost of electricity (LCOE) of P4.1462 per kilowatt-hour (kWh). The estimated savings to Meralco customers would reach P14.64 billion.
The power will be sourced from EERI’s planned natural gas-fired power plant in Ilijan, Batangas. EERI will construct, own, operate, manage and maintain 3×425.7MW units of combined cycle power plant capable of supplying 1,200MW.
MPPCL will supply Meralco 600MW of power starting December 2023 at P4.2605 per kWh. MPPCL will put up a 600MW coal power plant in Masinloc, Zambales.
The PSA is good for 20 years. The rates are significantly below the LCOE reserve price of P5.2559 per kWh. The PSA will result in savings to consumers of about P6.29 billion.
Meralco foresees a baseload capacity deficit in its portfolio covering 1,800MW. “Thus, in order to ensure continuous and reliable electricity for Meralco’s customers, there is a need for Meralco to source additional baseload capacity through bilateral power supply contracts,” the joint applications read.
The parties asked ERC to approve the PSAs and their terms and conditions after hearing on the merits.
Image credits: (Bloomberg)
