Meralco denies ‘midnight contracts’ with 7 suppliers

by Alena Mae S. Flores – July 04, 2017 at 08:39 pm

from Manila Standard Today

Power retailer Manila Electric Co. on Tuesday denied it forged “midnight contracts” with seven power plants that will allegedly result in “costlier and dirtier energy from coal.”

Meralco said in a statement such allegations were baseless and totally unsubstantiated as the power supply agreements were legally filed in accordance with the rules and regulations of the Energy Regulatory Commission.

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.

Meralco signed 3,551 megawatts of power supply agreements with seven power generators, capturing 81 percent of the 4,384-MW combined capacity of their power projects in April 2016.

The agreements were signed before the the implementation of the competitive selection process or CSP which required the distributors to hold bidding for their supply requirements.

“In order to sustain the growth trajectory of the Philippine economy and promote inclusive growth, it is very critical to note the importance of building more power plants in a timely manner to ensure the country’s energy security especially as we support the ‘Build, Build, Build’ agenda of President Rodrigo Duterte,” Pamintuan said.

He said the Philippines would need power to support the government’s infrastructure projects.

“We need power if we want to build. Otherwise, economic growth cannot be supported or sustained. The Luzon power crisis in the early 1990s, and the Mindanao power crisis in 2012 are testaments to the pernicious effect that widespread and extended power outages wreaks to our economy and our people as businesses close down and unemployment goes up,” he said.

Pamintuan said the negotiation for one PSA alone  started way back in 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,” the official said.

Pamintuan said more than 90 power supply agreements were filed by different distribution utilities and electric cooperatives following the ERC resolution restating the effectivity of the CSP.

“But out of these 90 PSAs, it is only the seven Meralco PSAs that curiously had been specifically singled out and questioned by certain interest groups. It is on record that Meralco was not among those that asked the ERC to restate the effectivity of the CSP mandate,” he said.

Meralco also belied claims by various groups that the approval of the seven PSAs would result in “dirtier energy from coal.”

Pamintuan said generation companies that Meralco contracted to supply power to its customers would utilize state-of-the-art technology with high efficiency and low emission power plants.

Meralco signed up a power supply agreement with Atimonan One Energy Inc. which will use ultra supercritical technology, already available in countries like the US, China, Japan and Germany.

Meralco officials said around 2,355 MW of existing power supply agreements would expire by 2019 thus a need to secure replace these capacities and provide for additional future power requirements.