ERC clears Meralco-Sunpower deal

The Energy Regulatory Commission (ERC) has given the green light for the Manila Electric Co. (Meralco) to enter into a power supply deal with Sunpower Phils. Manufacturing.

Meralco, managed by the Lopez Group, is the country’s largest power distributor while Sunpower is a wholly-owned company of Cypress Semiconductor of the US, located at the Laguna Technopark.

Based on the agreement approved by the ERC, Meralco will supply electricity to Sunpower’s solar wafer fabrication plant for 15 years or until 2019 at 53.27 percent discount on its existing retail rate.

The approved effective rate of the ERC will be $0.0533 per kilowatthour (kWh) after considering the 1.5-percent distribution loss charge. The rates will be changed depending on the maximum annual energy offtake.

For its part, Meralco, will source 60 percent of its power requirements from Mirant Philippines Corp. and the remaining 40 percent from National Power Corp. (Napocor).

Under the agreed deal, Mirant will supply electricity to Meralco for Sunpower from the 198 MW excess capacity of its Sual plant in Pangasinan at a generation rate of about $0.035 per kwh.

The deal said that while Napocor can supply in full the power requirements of Meralco for Sunpower, it could not offer the preferential rate to make Sunpower viable in the country.

Thus, Mirant sought the Department of Energy (DOE)’s participation in the said deal.

The state-owned Napocor will supply electricity at a generation rate of $0.04539 per kWh.

The commission also approved the transmission service agreement (TSA) covering the power generated by Napocor and Mirant purchased by Meralco for Sunpower.

Meralco agrees to pay the National Transmission Corp. (TransCo) about $0.08 per kwh depending on the consumption level.

ERC, in its decision, considered the rate offered by TransCo as reasonable enough to cover the cost of transmission service considering that no additional investment is required on its part.

The ERC, however, did not approve the exemption of Sunpower from the lifeline rate and interclass subsidies, saying "the exemption may be construed as discriminatory against the other end users required to provide subsidies."

In September 2004, Mirant and National Power Corp. (Napocor) have signed an agreement with Meralco to provide at least 15 MW power supply requirement of SunPower.

Mirant Philippines, the country’s largest private power producer, is a wholly-owned subsidiary of US-based power giant Mirant Corp.

The $330 million SunPower project is one of the newest and biggest investments in the Laguna TechnoPark which is located within the Meralco’s franchise area.

Laguna is within the franchise area of the Lopez-controlled power utility distribution firm. The 9,337 sq. km. franchise area of Meralco covers 22 cities and 89 municipalities including Metro Manila, the entire provinces of Bulacan, Rizal and Cavite; parts of the provinces of Laguna, Quezon and Batangas; and 17 barangays in Pampanga. Electrification level in the franchise is 97 percent.