Meralco, SPPC seek ERC approval for 1,200-MW power supply deal

By Alena Mae S. Flores – March 8, 2024, 8:35 pm
from manilastandard.net

Power retailer Manila Electric Co. and South Premiere Power Corp. are seeking approval of their agreement for the supply of 1,200 megawatts of capacity that would redound to the benefit of consumers this year.

Meralco and SPPC jointly filed an application with the Energy Regulatory Commission for approval of the deal that is estimated to result in P15.33-billion savings.

SPPC, which owns and operates the 1,200- MW combined-cycle power generating facility in Barangay Ilijan, Batangas City, won the best bid during Meralco’s competitive selection process last year.

Meralco declared SPPC as the winning bidder and awarded a PSA for its offer of P7.0718 per kilowatt-hour (total delivered levelized cost of electricity, VAT inclusive) for 1,200 MW.

The parties said that given a certain set of assumptions, the annual effective rate under the 2024 Meralco-SPPC PSA is P5.9450 per kWh.

Meralco said the annual delivered rate of P6.0950 per kWh (VAT exclusive and line rental inclusive) would be lower by about P1.5436 per kWh than the effective cost of P7.6386 per kWh, if the equivalent capacity under the PSA is to be sourced from the electricity spot market.

“In fact, by sourcing the capacity through the 2024 Meralco-SPPC PSA, Meralco’s average blended generation rate will be reduced by about P0.4175 per kWh resulting in savings to consumers of about P15.337 billion,” the application read.

Meralco sought approval to conduct a CSP as it foresees a baseload capacity deficit in its portfolio covering 810 MW (starting Dec. 26, 2023), an additional 200 MW (starting Feb. 26, 2024) and an additional 190 MW (starting March 26, 2024) – or a total of 1,200 MW.

“If this deficiency is not addressed through the grant of provisional authority or interim relief, Meralco’s customers stand to be exposed to the volatile prices of the WESM in the considerable volume of the subject 2024 Meralco-SPPC PSA – which is crucial at the start of the summer season of 2024,” the parties said.