Meralco starts competitive selection for power needs
By Lenie Lectura – July 15, 2019
from Business Mirror
THE Manila Electric Co. (Meralco) has started conducting a competitive selection process of its power requirements following a Supreme Court decision that required all power-supply agreements (PSAs) forged after June 30, 2015, to undergo a CSP.
In a published bid invite last Friday, the utility firm put for bidding 1,200 megawatts (MW) of capacity that Meralco needs in order to supply its customers.
“Pursuant to the DOE Circular 2018-02-0003, the Meralco, through the Third Party Bids and Awards Committee (TPBAC), hereby invites all interested and qualified parties to participate in the CSP in respect of the following proposed supply of electricity,” said the utility firm.
Meralco has lined up a total of three CSPs. Meralco Utility Head Economics Lawrence Fernandez, in a text message, said the utility firm will put up for bidding additional capacity requirements soon. “This is the first of three invitations to bid published. The three CSPs to be conducted are in accordance with the Power Supply Procurement Plan that Meralco submitted to the Department of Energy (DOE),” said Fernandez.
The CSP requires distribution utilities (DUs) to hold competitive bidding for their supply requirements as against securing power deals via bilateral contracts. This is meant to ensure transparency and fair competition.
Based on the bid invite, the 1,200-MW capacity must be supplied to Meralco for 10 years starting December 26, 2019, up to December 25, 2029. Meralco has the sole discretion and option to annually reduce the contract capacity by up to 600 MW from December 26, 2023, to December 25, 2025.
Meralco has set a minimum offered capacity at 1,000 MW from interested bidders. The terms of reference also stated that in case the supplier fails to provide power from its nominated power plant or portfolio of power plants, WESM (Wholesale Electricity Spot Market), or any other source, that supplier shall pay a fine equivalent to P908 multiplied by each MW per day, which shall be used to reduce the generation charge to the consumers.
Interested bidders must pay a P2,500 fee per MW of offered contract capacity, submit an expression of interest and confidentiality undertaking, and purchase bid documents from Meralco’s TPBAC on or before July 26.
The TPBAC will conduct a prebid conference on August 8, with submission of bids set on September 9.
In order to qualify to bid, an interested bidder must submit until September 9 its qualification documents, technical proposal and a bid security of P3.3 million per MW of offered contract capacity. Bids will be opened on the same day.
7 PSAs scuttled
Meralco earlier inked seven PSAs with several power-generation companies, including subsidiary Meralco Power Gen Corp. The total capacity of the seven PSAs are over 3,500 MW.
However, these PSAs were not implemented following the Supreme Court order arising from allegations that the Energy Regulatory Commission (ERC) gave due preference to Meralco by extending the deadline for compliance of CSP.
The ERC had moved the CSP’s effectivity date from November 6, 2015, to April 30, 2016, exempting the PSAs from undergoing the CSP.
Over 90 PSAs, with about 5,000-MW capacity, were affected by the SC decision. Of these, 70 percent of the affected PSAs are from Meralco.
The seven PSAs of Meralco include two from MGen, which is building power plants under Redondo Peninsula Energy Inc. and Atimonan One Energy Inc.
Atimonan’s first 2×600-MW power plant was already certified by the DOE as an Energy Project of National Significance.
The remaining five are with St. Raphael Power Generation Corp., Meralco’s joint venture with Consunji-led Semirara Mining and Power Corp.; Central Luzon Premiere Power Corp.; Mariveles Power Generation Corp.; Panay Energy Development Corp.; and Global Luzon Energy Development Corp.
