Psalm-Meralco accord seen to boost consumers savings
BY LENIE LECTURA – JANUARY 3, 2022
from Business Mirror
THE “Contract for the Supply of Electric Energy,” or CSEE, between the Manila Electric Co. (Meralco) and the Power Sector Assets and Liabilities Management Corp. (Psalm) will result in savings to consumers of about P76.79 million.
In an application filed by Meralco and Psalm before the Energy Regulatory Commission (ERC), Meralco told the agency that the delivered rate of the Psalm CSEE of P6.4216 per kilowatt hour (kWh) is lower by about P0.4224 per kWh than the effective cost of P6.8440 per kWh if the equivalent capacity under the CSEE will be sourced from the Wholesale Electricity Spot Market (Wesm).
“In fact, by sourcing the capacity through the Psalm-Meralco CSEE, Meralco’s average blended generation rate will be reduced by about P0.0026 per kWh, resulting in savings of about P76.79 million,” the 22-page application stated. Meralco and state-run Psalm are seeking approval from the ERC for their 90-megawatt (MW) CSEE, which was earlier cleared by the Department of Energy (DOE) last September 2021 for exemption from the competitive selection process (CSP) requirement, which directs all distribution utilities to contract supply via competitive bidding.
The power that will be sourced by Meralco from Psalm up to July 25, 2022 will come from the Unified Leyte Geothermal Power Plant.
Meralco and Psalm agreed to immediately implement the CSEE starting September 29, 2021, However, the CSEE still needs to be approved by the ERC. “The grant of provisional authority and/or interim relief shall confirm the proper implementation of the Psalm-Meralco CSEE, which ultimately redounds to the benefit of Meralco’s customers who stand to be exposed to the volatile prices of the Wesm,” they said in their filing.
The ERC may exercise its discretion by granting provisional authority prior to a final decision. “Wherefore, premises considered, applicants respectfully pray that the Honorable Commission, after hearing on the merits, render a decision approving the Psalm-Merlaco CSEE executed on September 28, 2021, and the terms and conditions thereunder, including the price. It is likewise prayed that a provisional authority and/or interim relief be issued confirming the authority of the parties to implement the subject CSEE in the Luzon grid,” their application stated.
Meralco said it was anticipating a peaking capacity deficit of 260MW, of which 90MW is secured through the CSEE, from September 2021 to July 25, 2022.
The reasons for the deficit include persistent Malampaya gas restrictions, the recently concluded maintenance shutdown of the Malampaya gas facility, and anticipated thinning electricity operating margins leading up to the May 2022 elections.
The need for Meralco to source additional peaking capacity through bilateral power supply contracts is also necessary in order to mitigate exposure to the Wesm of its customers.
