Meralco’s push for approval of coal-plant PSAs scored

THE Manila Electric Co. (Meralco) was criticized for pushing for the approval of power-supply agreements (PSAs) it entered into with coal-fired power plant developers by using as reason the expected higher electricity demand expected in the summer months.

An energy-research institution said  “Meralco and its affiliate coal companies have pushed for the approval and operation of their coal-fired power plants under the guise of protecting consumers from power outages.”

“These coal PSAs [power-supply agreements] are being contested by the consumers themselves, with the support of environment and grassroots organizations, for spelling out higher electricity prices and a dirtier environment for the next 20 years,” said Gerry Arances, executive director of the Center for Energy, Ecology, and Development.

He added Meralco and Redondo Peninsula are criticizing the delay of the approval of their coal PSAs, but are ignoring the interests of consumers who are against coal power. Arances said contracted coal power spells out higher electricity prices since coal is already more expensive than wind and solar energy.

Under the seven coal PSAs, the average rate of coal electricity is P3.65 per kWh, but wind and solar are at a lower rate of P3.50 per kWh and P2.99 per kWh, respectively, he noted.

As more and more countries transition away from coal, coal-fired power plants and their 20-year contracts are bound to become stranded assets, Arances said.

He cited a study conducted by the Institute for Energy Economics and Financial Analysis (IEEFA) and the Institute for Climate and Sustainable Cities (ICSC), which showed that “stranded coal assets” are a growing material risk inevitable in the Philippines.

Arances said that according to the IEEFA and ICSC study, trends in the coal-fired electricity generation sector, such as overbuilding coal-fired power plants, “may leave ratepayers at risk of having to pay above-market prices.”

“If Meralco and its coal affiliates have their way in the approval and operation of their coal plants, Philippine electricity consumers would be locked into 20 years of increasing electricity prices and we would be paying for stranded asset costs of these obsolete coal plants,” Arances said. “This will also deprive consumers of cleaner and cheaper electricity from sources like renewable energy.”