Meralco studying supply options following DOE advisory
By Alena Mae S. Flores – April 12, 2023, 6:30 pm
from manilastandard.net
Manila Electric Co. is studying its supply options, with assurance that it will procure at “least cost”, after the Department of Energy imposed a moratorium on exemptions from the competitive selection process or bidding.
Meralco and other distribution utilities undertake a CSP when procuring their supply, but certain exemptions apply such as emergency procurement.
Meralco asked for DOE for exemptions from the CSP after some of its supply contracts were terminated by the power generators. It also has pending exemption requests for additional supply during the dry months when demand is high.
“Even with the moratorium on COEs (certificate of exemptions), DUs still need to comply with their mandate to supply their captive markets in the least cost manner. Thus, Meralco will continue to evaluate and optimize all sources of supply to meet this mandate,” Meralco head of utility economics Lawrence Fernandez said.
Fernandez said Meralco was looking at tapping more supply from the Wholesale Electricity Spot Market, the trading floor of electricity.
“Operationally, there is no target share of WESM vs contracted energy. In general, after considering technical constraints (e.g., minimum load of a power plant, minimum offtake requirements, etc.), Meralco regularly compares WESM prices against the variable costs of available PSAs and takes energy from whichever is cheaper,” he said.
Meralco sourced around 32 percent of its supply from the WESM in March, up from 22 percent in February.
Fernandez said “another is increasing offtake from existing PSAs.”
The DOE issued an advisory on April 3 in coordination with other agencies that it is drafting a new policy, subject to public consultation, that aims to rationalize and streamline the conduct of CSP, particularly the issuance of COE-CSP, and the review of the terms of reference for unsolicited proposals.
It said the review aimed to ensure the timely and responsive procurement of power supply by the DUs for their captive market.
“In this regard, the DOE hereby issues this advisory for a moratorium on the issuance of a COE-CSP and the review of the TOR on the USP to ensure a smooth transition to the new Circular upon its effectivity,” the agency said.
The DOE said that as alternative, the DU and the power supplier should jointly file their emergency power supply agreement before the Energy Regulatory Commission for approval.
“The justification and proof of its compliance with the requirements under this section of the CSP Policy shall be integrated in its application before the ERC, subject to the Commission’s final review and approval,” the DOE said.
