Meralco, QPPI renegotiate PPA

MAUBAN, Quezon–The Manila Electric Co. (Meralco) has successfully renegotiated its power purchase agreement (PPA) with Quezon Power Philippines Inc.(QPPI) that will result in a savings of about $50 million (approximately P250 million) or a reduction in PPA cost by 10 centavos per kilowatthour (kWh).

"We have already renegotiated our contract with Meralco and that contract currently being considered by Meralco. We actually offered a rebate scheme for Meralco that would lower the price of power to the consumers," QPPL general manager Bart Lucarelli said, in a press briefing during a plant tour here.

Lucarelli said the renegotiated contract will enable the two parties to carry out the rebate program within the six-year period.

"We already made substantial offers to them. The $50 million that is being reported is accurate. The rebate scheme will be done for six years," he said.

He said based on the proposed scheme, Meralco can get the rebate if the power distribution company will be able to comply with the terms under the PPA contract.

"It is an easy scheme if they (Meralco) are in compliance with the PPA then they are entitled to get a rebate," he said.

Asked how much impact this will have on electricity rates, Lucarelli said, "It’s a bit complex. From our project, it will lower the price of power by 10 centavos per kilowatthour."

But Lucarelli pointed out that the renegotiated contract was temporarily set aside pending the resolution of other issues confronting Meralco. "It (the contract) is renegotiated but being kept inactive until many other issues are resolved by Meralco," he said.

He said coming out with a final renegotiated contract with Meralco will depend on the resolution of many issues being faced by the Lopez-controlled power distribution utility.

"The reality is, it is all going to be dependent on a lot of things happening to Meralco. There are a lot of things going on for Meralco like franchise renewal, unbundled power, once we get through all of those items then we will revisit the renegotiated PPA with them," he said.

Lucarelli said Meralco can still put some of its input on the renegotiated contract. "If they have other ideas, we can discuss it with them," he said. So far, he said this is what they have agreed upon to help lower the PPA of electricity end-users.

The 470-MW coal-fired QPPL, the country’s first build-own-operate (BOO) power plant, supplies its output exclusively to Meralco franchise. It has installed its own 230-kilovolt transmission line to connect to the Luzon grid.

Aside from QPPL, Meralco is also talking with its other IPPs’ – First Gas Power Corp.’s 1,000 MW Sta. Rita and 500 MW San Lorenzo as part of its effort to help the government in looking for ways to reduce power rates.

Meralco vice president for finance Daniel Tagaza said the three-man oversight committee composed of Margarito Teves, Sonny Dominguez and Emilio Vizens is taking care of the negotiations with Meralco’s IPPs.

Meralco has about 3.7 million customers. Its franchise areas include Metro Manila and adjacent provinces like Laguna, Rizal, Bulacan, Cavite, Quezon, and some parts of Batangas.