Whats Wrong with Meralco’s Atimonan One Project And How to Resolve it

David Celestra Tan, MSK
18 December 2019

Whats Wrong with Meralco’s 1,200mw Greenfield CSP? It is not that they specified Super critical high efficiency and low emission technology.

And it is not that there was no one else who submitted a bid other than Meralco’s own Atimonan One Energy and that the bid was declared a failure.  Neither is it that another failure of bidding will give Meralco the right to negotiate the contract with its subsidiary MeralcoPowerGen!

It is that Meralco and its supposed TPBAC never really gave legitimate competitors a chance to even consider the bid adequately and to compete.It looks and smells like manipulation all the way and it just stinks! One wonders if these guys really think Filipinos are so stupid they will not see a caper three kilometers away?

Atimonan One is a 1,200mw coal power project that is one and the largest of Meralco’s seven “palusot” negotiated power supply contracts it hurriedly signed in April 25, 2016 that the Supreme Court later ruled needs to be redone to comply with the Competitive Selection Process policy of the DOE.

It is also the first of the seven that Meralco is trying to do a remedial CSP. The first 1,700mw they bid and signed are for immediate needs that were not part of the Midnight 7.

In early July 2019 Meralco tried to slide the Atimonan One CSP through under the urgent projects umbrella of the 1,700mw that will be needed only a few months later or December 2019. With only one week to buy bid docs and 40 days to prepare a multi-billion dollar bid, no one else submitted a bid other than Meralco’s own Atimonan One Energy (and the other players, in the evident charade, backed out one by one).  As apparently expected or hoped for, the 1,200mw CSP was declared a failure. One more such exercise and failure, and the multi-billion project would be negotiated according to DC2018-02-0003 and the proposed ERC CSP guideline. Except, DOE Secretary Alfonso G. Cusi refused to play along the evident inclination of his bureaucracy, and steadfastly put in some consumer safeguards, things that it appears Meralco is not willing to follow.

Many of the things surrounding the 1,200mw CSP just did not make sense. Since it is now clear that Meralcodoes not really need the greenfield power plant until late 2024, they could have allowed 150 days to prepare a bid. Even 120 days. Had Meralco done that in July 2019, they would already be close to awarding to Atimonan One by this month. And the winner would still have five (5) years to build the plant.  Had Meralco allowed reasonable time, even if only Atimonan One Energy ended up as the lone bidder, it would probably be not as repugnant.

Talking about time, to put this into perspective, Meralco had known as early as 2014 that the DOE intended to require CSP. Why did they not fast track negotiated projects then? Why did they not file with the ERC by November 7, 2015?   Instead they spent all their time lobbying for the rules for CSP to be voluntary. For it to have a right to swiss challenge, all mechanisms for rigging.  Now it has been 6 years and they have not contracted for new greenfield projects. Is it the law or their desire to circumvent them?

(On the subject of CSP rules, one wonders why to this day, elaborate rules on swiss challenge biddings, unsolicited proposals, and allowable negotiations  kept on showing up in the ERC’s draft rules of CSP?)

A Way to Move Forward in the Public Interest

In all this conundrum we must not forget that in the end it is the public interest that should be primordial.

One way forward for the 1,200mw Atimonan One power plant is to make it part of a package solution for say 2,400mw greenfield power projects that would be more open and balanced. Atimonan One by itself can be unpalatable. But if it is made part of a whole package of power supply that can benefit the public in supply and least cost overall, there would be a net good effect on consumers.

And what are those?

Let us say Meralco and DOE agree for Meralco to hold a CSP for a total of 2,400mw of greenfield projects on open technology including this Supercritical HELE coal technology they like and natural gas. Four(4) power blocks of 600mw each.All due in 2023 and 2024. MeralcoPowerGen would be allowed to win only two of the 600mw projects If they are the lowest.(remember Section 45 of the Epira law allows them anyway to contract only up to 50% of their demand from an affiliated company generator).

Meralco should not have a problem winning two of them since they claim Super HELE is efficient, i.e. with lower fuel costs, and they have had at least a five (5) headstart against competitors on project development. All the bidders would be offering updated costs of the latest technologies since they are all greenfield projects.

This would most likely result to a win-win scenario where Meralco wins two 600mw packages totaling 1,200mw and other generators winning the other two 600mw of say natural gas. Meralco gets what they want and the consumers get a more diversified and cleaner power supply in natural gas.  Still better than an all-coal power supply originally negotiated by Meralco.

Somehow we have to get out of this impasse on the CSP activities of Meralco. Let us not wait until a power crisis is created and the people are  forced to swallow the bitter pill of self-negotiated emergency power supply….at any price.

One thing that will help now is for the DOE to come out with a clear position on the Guidelines for CSP. Are they coming up with a more enlightened one than DC2018-02-003?

Let us hope pushing the country to a power crisis is not plan B for these big guys.

MatuwidnaSingilsaKuryente Consumer Alliance Inc.
matuwid,org
david.mskorg@yahoo.com.ph