Meralco, 1590 Energy Corp. power supply agreement extended by ERC

by Lenie Lectura, January 29, 2015
from BusinessMirror

AN Interim Power Supply Agreement (Ipsa) between the Manila Electric Co. (Meralco) and 1590 Energy Corp. has been approved for extension by the regulators.

In a six-page decision, the Energy Regulatory Commission (ERC) has extended the two firm’s Ipsa until July 25, 2015.

“Finding the motion to be consistent with the commission’s decision, dated May 12, 2014…the Commission hereby grants the same. Accordingly, the term of the Ipsa executed between Meralco and 1590 Energy is hereby extended until July 25, 2015, subject, however, to the same conditions provided in the decision,” the ERC said.

The ERC’s May 2014 decision extended the Ipsa between the two firms up to October 31, 2014. Meralco said there is a need to further extend the Ipsa since reserve capacity is expected to fall below the required contingency reserves due to scheduled maintenance shutdown and forced outages of major base load and gas-fired power plants in Luzon. These are feared to result in a tight supply situation.

Meralco’s Ipsa is meant to lessen the utility firm’s exposure to the Wholesale Electricity Spot Market (WESM), the country’s electricity-trading floor.

“There is a need to further extend the term of the Ipsa to ensure the availability and affordability of the supply of electricity to its customers and to mitigate exposure to the WESM,” Meralco said.

The utility firm also made calculations that an extension of its IPSA with 1590 Energy Corp. from January to July this year will result in an overall cost savings in its blended generation charge of P0.0922 per kilowatt-hour, equivalent to P1.6055 billion.

Meralco said it the Ipsa is not implemented during the period, it would be constrained to source energy from the WESM, which could have been supplied through the implementation of the Ipsa.

The 1590 Energy is primarily engaged in power generation and operates a 225-megawatt diesel-fired power plant in Bauang, La Union.

Meralco has filed similar applications with the ERC, but the agency has yet to approve them.

Among others, Meralco seeks to source additional capacity from interim bilateral-supply agreements with the units of Global Business Power Corp. until July this year.

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