Meralco, SPDC sign Ipsa deal during shutdown of Malampaya

By Lenie Lectura – January 30, 2017

from Business Mirror

THE Manila Electric Co. (Meralco) and Strategic Power Development Corp. (SPDC), a subsidiary of SMC Global Power Holdings Corp., have entered into an interim power-supply agreement (Ipsa) for the purchase and supply of electricity during the 20-day shutdown of the Malampaya gas facility.

The Ipsa must, however, be approved by the Energy Regulatory Commission (ERC).

“In order to mitigate exposure to the Wholesale Electricity Spot Market and to provide additional capacity for such period that could contribute to the availability and affordability of the supply of electricity to Meralco’s customers, there is a need for Meralco to source the corresponding deficiency through interim bilateral supply contracts with power suppliers who have available capacity,” they said in their 13-page filing.

Under the contract, SPDC shall supply Meralco “100 megawatts [MW] per hour of electricity from 0901H to 1000H and 2001H  to 2100H, and 150 MW per hour from 1001H to 2000H on a firm basis. The power will be sold at P4.35 per kilowatt-hour (kWh), excluding taxes and line rental. Based on simulations, the effective delivered price under the Ipsa for the period January 28 to February 16 is P4.901 per kWh.

SPDC is the Independent Power Producer Administrator of the 345-MW San Roque hydropower plant in Pangasinan.

Meralco said there is a need to source additional capacity as it “foresees a capacity deficit in its portfolio” while Malampaya is shut down.

From January 28 to February 16, the Malampaya gas field would not be able to supply three gas plants with an aggregate capacity of 3,211 MW to the Luzon grid, of which, 2,565 is supplied to Meralco’s franchise area.

The maintenance shutdown of the gas facility will coincide with scheduled maintenance of other power plants and possible occurrences of forced plant outage.

Meralco also said it is allowed to enter into bilateral power contracts subject to review by the ERC, following two failed biddings.

On January 12 Meralco issued an invitation to challenge SPDC’s proposal. However, no qualified submissions were received per the deadline set. As such, Meralco had to issue another invitation for a price challenge. Under the Competitive Selection Process (CSP), should there still be no qualified submissions received for the second deadline, Meralco shall execute the Ipsa with SPDC.

“Having received no qualified submissions by the final deadline set as published, Meralco awarded the Ipsa to SPDC, after which Meralco and SPDC proceeded with the finalization and execution of the Ipsa,” their application stated.

The Ipsa was executed on  January 24 and is now up for review by the ERC.