Meralco defends power supply deals

MANILA, Philippines - Manila Electric Co. (Meralco) said its seven power supply deals will provide adequate and least cost supply to consumers and support the massive infrastructure program of the Duterte administration.

Meralco first vice president and legal and corporate governance head William Pamintuan said building more power plants in a timely manner is critical to sustain the growth trajectory of the Philippine economy and promote inclusive growth.

This will also “ensure the country’s energy security especially as we support the ‘Build Build Build’ agenda of President Duterte,” he said.

“At the end of the day, 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,” Pamintuan said.

He was responding to allegations the power supply agreements (PSAs) pending before the Energy Regulatory Commission (ERC) are midnight contracts and will result in costlier and dirtier energy from coal.

Pamintuan said the PSAs were legally filed in accordance with the rules and regulations of the ERC with the objective of ensuring adequate and reliable power supply at 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 the agreements were signed and filed with the ERC,” he said.

Citing one case, negotiation for one PSA started in 2012 and was concluded only in 2016.

“Meralco negotiated the 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,” Pamintuan said.

The PSAs involve a supply of 3,551 MW, which corner 81 percent of the combined output of the seven power plants, most of which are owned or partly owned by Meralco through its power generating unit Meralco PowerGen Corp. (MGen).

The applications were submitted to the ERC on April 29, 2016, just a day before the new effectivity date of the competitive selection process (CSP) policy requiring distribution utilities to undertake competitive bidding to secure PSAs with generation companies.

Originally, the deadline to comply with the CSP policy was scheduled on Nov. 6, 2015 but the ERC decided to defer the implementation following clarifications from stakeholders.

During a congressional hearing yesterday, ERC OIC Alfredo Non said the extension was not to give undue advantage to Meralco.

He said the extension was to accommodate applications of a number of power companies still undergoing negotiations for power supply deals.

Apart from Meralco, there are more than 90 PSAs filed by different distribution utilities and electric cooperatives ahead of the CSP deadline, Pamintuan said.