THE Manila Electric Co. has forged an emergency power supply agreement (EPSA) with San Miguel Global Power Holdings Corp. and Aboitiz-led GNPower Dinginin Ltd. (GNPD) for a total of 670 megawatts (MW), according to a Meralco executive.
Meralco First Vice President Jose Ronald V. Valles said during the “Philippine Electric Power Industry Forum” the firm “recently received an offer from GNDP [for] 300MW and from SMC [for] 370MW.”
“That’s for one year and we sought exemption from the DOE [Department of Energy] and we are now in the process of finalizing the agreements with the two generators,” added Valles, a lawyer and head of Meralco’s Regulatory Management Office.
While he demurred from citing the exact rates agreed upon by the parties, Valles noted that the average rate is “about P7.8” per kilowatt hour, which is “cheaper than what we signed in the past.”
The EPSA takes effect on March 26. Valles said SMC will source the 370MW from a combination of coal and LNG (liquefied natural gas) power facilities.
“The first two months will be sourced from coal and after two months it will be sourced from LNG plants as they have committed to the DOE that their LNG terminal will start operating in May,” said Valles.
Long-stop date
SOUTH Premier Power Corp. (SPPC), a unit of SMC Global Power, will take charge of the LNG trading of the P14-billion LNG facility that will be operated by Linseed Field Power Corp., a subsidiary of Singapore-headquartered Atlantic, Gulf and Pacific Co. (AG&P). The proposed project will supply the 1,200-MW Ilijan combined cycle power plant and SMC Global Power’s future projects.
The 670MW was supposed to come from SPPC but it secured a Temporary Restraining Order (TRO) that stopped the Energy Regulatory Commission (ERC) from enforcing its September 2022 order.
The ERC order denied the rate hike joint petitions of Meralco with SPPC and another unit of SMC Global Power, San Miguel Energy Corp. (SMEC), for price adjustments to serve as temporary relief covering a combined P5.2 billion in losses that the company said was incurred from January to May 2022 “due to the unprecedented spike in fuel prices.”
The TRO then led to the cessation of 670 MW supply that SPPC was obligated to deliver under its PSA with Meralco.
Meanwhile, Meralco and SMC Global Power both said on Monday that the non-issuance by the ERC of the final approvals of the PSAs within the respective long-stop dates on September 17, 2021, and September 23, 2021 led to the termination of the PSAs.
“It was terminated on the ground that that long-stop date had lapsed. The long-stop date is existing in all PSAs. This serves as a security for all power generators,” Valles said. “It lapsed but we were able to ask SMC for an extension at that time until SMC was no longer able to extend it anymore.”
PSAs terminated
LAST Friday night, Meralco was informed by SMC Global Power that the PSAs—with a total capacity of 1,800MW—between Meralco and Excellent Energy Resources, Inc. (EERI) and with Masinloc Power Partners Co. Ltd.—had been terminated.
Under the PSAs, EERI should deliver 1,200MW of gas-generated capacity starting December 2024 and the remaining 600MW from Masinloc Power starting May 2025.
But since these were terminated, Meralco is looking at conducting another auction, saying there are power plants that could offer their capacity.
“We are confident that we can source this. There are many power plants where we can source this such as from Dinginin and some plants of SMC. They can still participate,” said Valles.
When sought for comment, ERC Chairman Monalisa C. Dimalanta said the agency will look into it.
“It seems it has lapsed. We need to check also if they were required to submit, but failed to file it. That could be a reason why the commission did not act on it.”
