Meralco, South Premiere ink 300-MW power supply deal

BY LENIE LECTURA – MARCH 29, 2023
from Business Mirror

A Meralco lineman fixes cables on a street in Malate district in Manila in this recent photo.

MANILA Electric Co. (Meralco) and South Premiere Power Corp. (SPPC) have executed an emergency power supply agreement (EPSA) for the supply of 300-megawatts (MW) baseload capacity, partially replacing the 670MW-capacity covered by their 2019 power supply agreement (PSA), which was subjected to a Writ of Preliminary Injunction issued by the Court of Appeals (CA).

The EPSA takes effect from March 26, 2023, up to March 25, 2024.  This followed the power distributor’s receipt of the Department of Energy’s (DOE) certification exempting the EPSA from a competitive selection process (CSP), thereby allowing its immediate implementation.

In a statement released last Wednesday, Meralco said the EPSA reflects a 2-part tariff composed of a P1.75-per-kilowatt-hour (kWh) fixed-cost and variable-cost based indexed on fuel price movements. Meralco did not divulge the fuel pass-through cost.

Earlier, Meralco First Vice President and head of regulatory management office Ronald V. Valles said the offer has an average price of P7.80 per kWh. If this was the amount agreed upon by the parties in their EPSA, the rate is higher compared to P4.2455 per kWh stated in their 2019 PSA, which was indefinitely suspended by the CA last January.

“The execution of the EPSA will help shield electricity consumers from volatile and potentially higher generation costs in the Wholesale Electricity Spot Market, which is historically-recorded during the dry season when power demand spikes,” the utility firm said.

GNPD offer

VALLES also mentioned earlier that it received an offer from GNPower Dinginin Ltd. Co. (GNPD) for 300MW. The Aboitiz-led GNPD previously supplied Meralco with the same capacity through an EPSA from December 15, 2022, to January 25, 2023, at a rate of P5.96 per kWh. This was extended from February 3 to February 25. However, the second EPSA carried a full fuel-pass through arrangement at a rate of P8.53 per kWh.

Meralco added that it sought the DOE’s approval for another EPSA for its 180-MW baseload capacity requirement meant to boost available supply and help address the reduced capacity of natural gas-fired power plants.

The 180-MW supply was originally subjected to two rounds of CSPs, which both failed due to lack of bidders. Given the urgency of the additional supply for the dry season, Meralco sought approval to execute an EPSA instead.

Meralco said it remains committed to its mandate to deliver stable, reliable, and least-cost supply to its 7.6 million customers and unceasingly works to mitigate any impact of challenging circumstances on its power rates.

Image credits: Roy Domingo