ERC provisionally clears Meralco power deals that had CSP in ’19

By Lenie Lectura -February 26, 2020
from Business Mirror

THE Energy Regulatory Commission (ERC) has provisionally approved the Manila Electric Company’s (Meralco) power supply agreements (PSAs) that underwent competitive bidding last year.

“The ERC granted provisional authority to implement the PSAs for the 1,200megawatt (MW) baseload capacity on December 23, 2019 and for the 110MW mid-merit capacity on January 30, 2020,” said Meralco.

The 110MW forms part of the 500MW, five-year contract that was won by First Gen Hydro Power Corp., Phinma Energy Corp. and South Premiere Power Corp. (SPPC).

It was Phinma Energy Corporation’s contract, involving a supply of 110MW to Meralco, that was given the green light by the ERC. The power supply contracts of First Gen Hydro Power Corp. to supply Meralco 100 MW of capacity and SPPC for 290MW have yet to be approved by the ERC.

Meanwhile, the ERC-approved 1,200MW power supply contract was forged with PHINMA Energy, SPPC and San Miguel Energy Corporation (SMEC).

Meralco successfully concluded the Competitive Selection Process (CSP) for the 1,200MW baseload and 500MW mid-merit capacities, respectively, in September last year. Thereafter, Meralco filed applications for approval of these PSAs with the ERC.

With the provisional approval, Meralco can already implement these power deals.

The utility firm has lined up a total of three CSPs. The last one—a 1,2000MW supply contract for 20 years—has yet to undergo CSP.

Meralco First Vice President and Head of Regulatory Management Atty. Jose Ronald V. Valles said the Third Party Bids and Awards Committee (TPBAC) is currently going over the revised terms of reference (TOR) for the 1,200MW power supply contract.

“We wait for their advice as to when will this be published,” he said, adding that actual bidding may take place in two months if the TOR is published by next week.

The publication date of the TOR also depends on the Department of Energy’s (DOE) reply regarding a concern raised by a prospective bidder. “We intend to file a letter to the DOE in response to the query made by a prospective bidder with respect to replacement energy. We will need to await for DOE clarification on that before we finally decide to publish the TOR,” added Valles.

He identified the bidder as GNPower, which wants to include in the TOR a 30-day scheduled plant maintenance and a 15-day forced outage allowance instead of a zero-outage allowance.

“The concern raised by GNPower was about the obligation for replacement power. They are saying that the generator, prospective bidder, cannot afford to have zero outage allowance. They are asking for 30 days scheduled maintenance and 15 days forced outage allowance to be reflected in TOR,” explained Valles.

“Within the outage allowance, the distribution utility will have the obligation to procure the replacement power and charge that replacement power to consumers. But beyond outage allowance, beyond the 30 days and 15 days, the generator will have to procure that replacement power at its own risk,” added Valles.

Revised TOR hailed

Meralco president Ray Espinosa said he is pleased with the outcome of the revised TOR, following the intervention of the DOE, which wanted more power firms to participate in the auction.

“That’s why it became important to work out a good terms of reference so we’re able to attract more bidders. I think we have a balance and good TOR already, subject to only one clarification, which relates to the replacement power, obligations related to outages. After that, we should be good to go.