Watch Meralco rates, ERC told, as San Miguel quits ’21 supply contract
By Alena Mae S. Flores – March 18, 2023, 1:40 am
from manilastandard.net
Consumer groups have asked the Energy Regulatory Commission (ERC) to closely monitor any power rate changes in the Manila Electric Co. (Meralco) franchise area following the decision of San Miguel Corp. to terminate its 2021 power supply contracts with the distributor.
Former ERC commissioner Alfredo Non also said Meralco consumers are supposed to enjoy lower rates based on his computation of refunds totaling about P100 billion.
SMC Global Power Holdings, Inc. on Friday decided to terminate its power supply agreements with Meralco totaling 1,800 megawatts that were supposed to be delivered starting in 2024.
SMC has not issued a statement why it decided to withdraw from the PSA as of press time, although sources told the Standard its 2021 Power Supply Agreement with Meralco has not yet been approved by the ERC.
The company has also been embroiled in a legal dispute over its 2019 PSA with Meralco totaling 1,000 MW.
Non said in an ABS-CBN interview that Meralco’s distribution rates have not changed for the past decade.
“From 2012 to 2015, around P22 billion (is owed to consumers) excluding interest. Next period, 2016 to 2022 around P90 billion,excluding interest,” Non said, referring to his possible refund computations.
Meralco spokesman Joe Zaldarraiga, for his part, assured the power retailer’s tariffs are under stringent review and are only implemented once approved by the ERC.
Meanwhile, Terry Ridon of InfraWatch said the rates of SMC’s two contracts with Meralco “will certainly change upon the re-bidding of the power supply gap left by the termination of the power supply contracts.”
“We have yet to see whether the new contracts will result in higher prices, but the ERC should ensure the least cost based on market conditions during the rebid,” Ridon said.
Gerry Arances, Convenor of the Power for People Coalition, said that as Meralco seeks to hold a rebid, “it now has a chance to ensure genuinely least-cost electricity for consumers.”
“We advise Meralco to ensure that it uses straight energy pricing in its terms of references for the new contracts, and for DOE to mandate fixed pricing in all PSAs, or else face the outrage of consumers,” Arances said.
SMCGP on Friday decided to terminate its power supply agreements with Meralco as confirmed by Meralco and the ERC.
Meralco said it is studying its options including the possibility of requesting the Department of Energy for approval to conduct another CSP (Competitive Selection Process).
ERC chairperson Monalisa Dimalanta said they were informed by Meralco through text message that they received from San Miguel Corp.’s Excellent Energy and Masinloc Power Partners the notices of termination of the PSAs for 1,200MW from Excelent Energy and 600MW from MPPCL, respectively.
“According to Meralco, they will jointly file with EE and MPPCL the appropriate pleadings with ERC by Monday for the withdrawal of the PSAs,” Dimalanta said. (See full story online at manilastandard.net)
“ERC will then review and act on such motions, when filed, after determination of compliance with the law and legal processes. We note that no supply is currently being served yet to Meralco from these PSAs,” she said.
EERI and MPPCL offered the best bids for Meralco’s 20-year 1,800 MW supply contract in February 2019, out of the six qualified offers it received.
EERI offered a levelized cost of electricity (LCOE) of P4.1462 per kilowatt hour while offering P4.2605 per kWh.
Both are significantly below the LCOE reserve price of P5.2559 per kWh.
EERI offered to supply Meralco 1,200 MW, from a natural gas-fired power plant starting 2024, while MPPCL offer is at 600 MW from a coal-fired power plant starting 2025.
SMC sought approval from the ERC for a temporary rate hike due to high fuel costs and gas constraints but was rejected by the regulator.
The company decided to file a case with the Court of Appeals and received a writ of injunction for the South Premiere Power Corp. covering 670 MW.
SPPC owns the 1,200 MW Ilijan natural gas power plant in Batangas.
