Meralco asked to bid out contracts

By Alena Mae S. Flores – April 18, 2018 at 07:50 pm

Energy Secretary Alfonso Cusi asked power retailer Manila Electric Co. to open its power supply agreements to Swiss Challenge instead of waiting for an approval from the Energy Regulatory Commission.

“From my personal point of view, they should just subject it to Swiss Challenge, if they’re confident of the cost… Because I’m representing the public,” Cusi told reporters.

Swiss Challenge is a process in public procurement where an agency or company invites third parties to match or exceed an unsolicited bid.

“We are talking of supply of electricity. If I can supply you cheaper [electricity], why would you get from him [another party],” Cusi said.

Meralco’s power supply agreements with several suppliers covering more than 3,000 megawatts of capacity await the approval of the Energy Regulatory Commission whose four members were ordered suspended by the Office of the Ombudsman.

Meralco and its suppliers reached the agreements prior to the effectivity of the competitive selection process, which requires distribution utilities to undergo public bidding of their power requirements.

Cusi said undergoing a Swiss Challenge would be similar to CSP because it would promote competition.

“I’m not against Meralco. It’s just a good process that I want supply and I’m looking at affordability. I’m looking at the tariff…I want assurance of supply. I’m looking at 2021,2022, 2030, so it needs to be built,” he said.

Cusi said he just wanted to make sure that electricity rates would be fair and affordable to everybody.

Cusi said he discussed the issue with Meralco PowerGen Corp. president Rogelio Singson. Meralco PowerGen is the power generation unit of Meralco, which has several PSAs pending with the ERC.

“As long as it’s a legal process, I want it legally, so there will be no issue,” Cusi said.

ERC issued a statement last year that it was carefully scrutinizing Meralco’s PSAs which had been pending for more than a year to ensure that “just and reasonable costs” were passed on to consumers.

Meralco signed power supply agreements with seven generators in April 2016 to secure 3,551 MW of capacity to meet the demand of its franchise area.

Meralco signed PSAs with Panay Energy Development Corp.,  Atimonan One Energy Inc., Redondo Peninsula Energy Inc., St. Raphael Power Generation Corp.,  Central Luzon Premiere Power Corp., Mariveles Power Generation Corp. and Global Luzon Energy Development Corp.

ERC already granted provisional approval to Panay Energy’s PSA with Meralco. The regulator, however, suspended further hearings on three other PSAs with Central Luzon, Mariveles Power and Global Luzon because of the alleged lack of environmental compliance certificates.

ERC is mandated to review bilateral power supply contracts signed by distribution utilities under Section 45 of the Electric Power Industry Reform Act  of 2001.

Meralco said the PSAs were legally filed in accordance with the rules and regulations of the ERC.

It said the objective of the power supply agreements was to ensure adequate and reliable power supply at the least cost to Meralco’s more than six million customers.

“Each of these PSAs had undergone a very rigorous, lengthy and, at times, contentious negotiation process with the generation companies which actually took many months and years before these agreements were signed and filed with the ERC,” Meralco first vice president and head of legal and corporate governance William Pamintuan said earlier.

Pamintuan said the negotiation for one PSA alone started as early as 2012 and was only concluded and signed in 2016.

“There is therefore absolutely no factual basis to claim that these are midnight contracts. Meralco negotiated these PSAs in utmost good faith and the resulting rates and other terms and conditions that were filed before the ERC are very competitive and favorable to the consumers,” Pamintuan said.