MERALCO SIGNS CONTRACT CAPACITY OF 500 MW

New PSAs to cut down generation charge

MERALCO held on September 16, 2019 the successful PSA signing for contracts to supply Meralco 500 MW of mid-merit capacity effective December 26, 2019 for a term of 5 years.  The contracts will be subject to regulatory proceedings and evaluation by the Energy Regulatory Commission (ERC).

The CSP bidding was done last September 11 in accordance with the Department of Energy (DOE) Circular requiring Distribution Utilities to procure power through Competitive Selection Process (CSP). The CSP was administered by the Third-Party Bids and Awards Committee (TPBAC) that was constituted pursuant to the DOE Circular.

The Meralco TPBAC is chaired by Atty. Ferdinand Domingo, who was selected as representative of consumers, together with Atty. Adrian Cristobal Jr., another consumer representative.  Atty. Cristobal was a former Secretary of the Department of Trade and Industry.  The process for the selection of the consumer representatives was approved by the DOE.

The distribution utility informed the public that, after the opening and evaluation of the Bids held that day, the TPBAC declared the Bids submitted by First Gen Hydro Power, Phinma Energy, and South Premiere Power to be the Best Bids.

The bidding for the 500 MW was witnessed by representatives from the DOE.

Additional savings to consumers

The Best Bids underwent post-qualification and the TPBAC issued the respective Notices of Award on September 12, 2019, followed by the signing today of the Power Supply Agreements with Meralco.

First Gen Hydro Power Corporation’s contract capacity is for 100 MW with an all-in headline rate (VAT inclusive) of PhP5.1908/kWh and computed all-in Levelized Cost of Energy (LCOE, VAT Inclusive) of PhP5.3989/kWh. Phinma Energy Corporation’s contract is for 110 MW at all-in headline rate (VAT inclusive) of PhP5.5858/kWh and computed all-in LCOE (VAT Inclusive) of PhP5.5858/kWh. South Premiere Power Corporation’s contract is for 290 MW and has an all-in headline rate (VAT Inclusive) of PhP5.5347/kWh and computed all-in LCOE (VAT inclusive) of PhP5.7527/kWh.

Meralco declared that today’s successful PSA signing will result in additional savings and, ultimately, least cost to consumers.

2nd Successful Competitive Selection Process (CSP)

It will be recalled that Meralco also successfully signed 1,200 MW of baseload capacity last September 13.  During the signing, SMC President Ramon Ang said, “Actually we were hesitant to join the bidding. walang fuel pass-on, talagang grabe ang risk.  Pero I know [Meralco President Ray Espinosa] was trying to protect the consumer.”

Phima Energy president Eric Francia added, “The most important thing is that the consumers are benefitting.  So kami nang bahala to manage that risk. It’s not easy but hopefully this sets the new normal. I’m hopeful that the rest of the sector will follow and really deliver very positive benefits to the Filipino consumer.”

Meralco President and CEO Atty. Ray C. Espinosa emphasized that, “The contracts’ all-in rate already includes line rental and VAT and the cost of replacement power for all plant outages. The generator companies will also be liable to pay a fine if they are unable to deliver power, which will be used to reduce the generation cost to the consumers.”

According to Atty. Espinosa, “The resulting prices from the CSP are significantly lower than their average generation cost today of around PhP5.88 per kWh (VAT inclusive).  The results of today’s signing for 500 MW are expected to save consumers PhP 4.4 billion annually for the next five years.  This is equivalent to a rate reduction of around PhP0.13 per kWh for consumers, starting December 26, 2019.”