Meralco gets DOE approval for TOR of power auction

Power lines run beside a sign of the Manila Electric Co. (Meralco) branch in Manila in this Bloomberg file photo.

By Lorenz S. Marasigan @lorenzmarasigan

Manila Electric Co. (Meralco) announced on Thursday that the Department of Energy (DOE) has approved the Terms of Reference (TOR) for the supply of 170 megawatts (MW) of peaking power under the competitive selection process (CSP).

“We thank the DOE for the timely approval of the TOR that will allow us to proceed with the emergency procurement for the supply needed to meet the anticipated increase in demand in the coming months,” said Meralco Head of Regulatory Management Office Jose Ronald V. Valles.

The CSP covers power supply agreements and is underwritten by distribution utilities like Meralco to build up their supply portfolio.

The DOE’s Third Party Bids and Awards Committee (TPBAC) called on interested generation companies to participate in the CSP for the contract covering the period February 26 to July 25.

Interested parties may submit their Expression of Interest on January 5. A pre-bid conference is slated for January 12, and the bid submission deadline is scheduled for February 2.

“This will help Meralco ensure availability of reliable and cost-competitive supply, which is especially critical during the 2022 dry months and the upcoming national elections,” added Valles.

The presidential elections will happen in May or during the hot dry season, when energy consumption increases sharply. Ensuring a steady supply of energy during the elections is critical, given that historically, blackouts are often used as excuses for election-related cheating.

In October, Meralco Chairman Manuel V. Pangilinan said there is indication that the utility firm will exceed the consolidated core net income (CCNI) achieved last year, despite spiraling fuel prices.

The sudden but significant rise in the prices of gas, coal and oil which can affect Meralco’s generation margins, and the lingering effect of the pandemic remain key risks to the company’s outlook for the fourth quarter. Still, Pangilinan is confident that full-year core profit will improve compared to last year.

Meralco reported that its CCNI at end-September this year grew by 15 percent to P18.1 billion from last year’s P15.7 billion driven by the combined effect of the 6-percent increase in energy distributed with the easing of quarantine restrictions, and increased contribution from its different business units and subsidiaries.

Reported net income improved by 47 percent year-on-year to P16.5 billion from P11.3 billion due to lower exceptional charges arising from the impairment recognized from the company’s investment in PacificLight Power Ltd. in 2020.

Image credits: (Bloomberg)

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