Meralco, South Premiere ink 180-MW power supply deal

BY LENIE LECTURA – APRIL 17, 2023
from Business Mirror

The Manila Electric Co. (Meralco) and South Premiere Power Corp. (SPPC) have entered into another emergency power supply agreement (EPSA) covering 180 megawatts (MW) of baseload capacity.

“We already executed an EPSA with SPPC and this was already implemented since April 1, in addition to the earlier 300MW with SPPC that was given certificate of exemption (COE) by DOE (Department of Energy),” Meralco first vice-president and head of regulatory management Jose Ronald Valles said in a text message.

The 180MW baseload requirement is needed to partially supply Meralco’s requirement until March 25, 2024.

The 300MW that Valles was referring to is also baseload capacity, partially replacing the 670MW-capacity covered by Meralco and SPPC’s 2019 power supply agreement (PSA), which was subjected to a Writ of Preliminary Injunction issued by the Court of Appeals (CA). The EPSA for the 300MW took effect last March 26 and is valid up to March 25, 2024.

Meralco said the execution of the EPSA will help shield electricity consumers from volatile and potentially higher generation costs in the Wholesale Electricity Spot Market (WESM), which is historically recorded during the dry season when power demand spikes.

The grant of COE by the DOE happened before the agency issued a moratorium on the issuance of COE on competitive selection process (CSP).

The 180MW baseload supply requirement was earlier subjected to two rounds of CSPs. After two failed bids, Meralco applied for a COE.

“Similarly, there was another CSP that was declared a failed bid last April 13 due to the lack of bidders. This involved the 300MW peaking requirement of Meralco. “No one submitted. It was a failed bid,” Valles said.

The 300MW-peaking and the 180MW-baseload capacity requirements of Meralco are primarily meant to cover for the hot dry season when demand for electricity is at its peak, Valles said.

Meralco will now proceed to negotiate the 300MW peaking requirement.

According to Meralco utility economics head Lawrence Fernandez, the Third-Party Bids and Awards Committee (TPBAC) did not receive any bids. Following this, the TPBAC declared the second round of the CSP a failed bid, in accordance with the DOE’s CSP guidelines, and reported the same to the distribution utility [DU].

“The TPBAC reported to the DU that the conditions are present for the DU to enter into direct negotiations to try to meet the supply requirement, in accordance with the DOE’s CSP guidelines,” Fernandez said via Viber on Sunday.

Under the approved terms of reference (TOR), the power supply agreement (PSA) for the 300MW peaking power capacity covers a 5-month contract supposedly to commence on February 26 to July 25.

The Meralco officials did not say why there was a lack of interest from power generation companies (gencos). Sources, however, said gencos prefer either longer-term contracts or sell their capacity to the WESM for “a better price.”

The Meralco officials did not say what entity the company will likely negotiate with. Valles is hopeful though that the negotiation and approval process would be concluded as soon as possible to help augment the power supply in its franchise area.

“This is a very short-term PSA which is supposed to end in July supply month. We are open to receive offers from all interested gencos for possible negotiation. At the moment, we have not received any definitive offer yet,” he said.

Meanwhile, the DOE has conducted last April 13 the first of its series of public consultations on the new CSP policy.

This policy is intended to streamline the CSP highlighting the responsibilities of the DOE, Energy Regulatory Commission (ERC), and National Electrification Administration under the Electric Power Industry Reform Act that is adaptable and flexible to the needs of the distribution utilities to ensure efficient, timely and transparent procurement of power supply for the electricity consumers.

After the issuance of the policy, the ERC will then issue the implementing guidelines in the conduct of the CSP and the evaluation of PSAs resulting from the CSP of distribution utilities.

The next schedule of public consultations will be on April 17 and 19. The draft CSP policy is posted on the DOE website and the deadline for comments is on April 21.