ERC okays Meralco supply deals

MANILA, Philippines - The Energy Regulatory Commission has approved long-term supply contracts between Manila Electric Co. (Meralco) and five power generators.

The deals assure the supply of competitively-priced electricity for Meralco’s customers in the long run, the power distribution giant said in a disclosure.

Specifically, the power sector regulator approved Meralco’s power supply agreements (PSAs) with San Miguel Energy Corp. (SMEC), South Premiere Power Corp. (SPPC), Aboitiz-led Therma Luzon Inc., San Miguel Corp. (SMC) subsidiary South Premiere Power Corp., Masinloc Power Partners Co. Ltd. and Consunji-led SEM-Calaca Power Corp.

Meralco signed the PSAs late last year to replace the expiring transition supply contracts (TSC) with state-owned National Power Corp. (Napocor).

“Due to the imminent implementation of the retail competition and open access (RCOA), Meralco negotiated with different suppliers for the supply of up to 2,880 megawatts (MW) that will replace the capacity covered under its existing TSCs with Napocor, which will expire on Dec. 26, 2012,” the company said.

TSC is a temporary power supply deal between power distributors and state-owned power plants that are subject to privatization.

State-owned Power Sector Assets and Liabilities Management Corp. earlier approved a two-month extension of the TSC.

“The said PSAs are intended to cover the capacity that will be displaced upon the expiration of the TSC with Napocor and avert, if not minimize, Meralco’s exposure to the Wholesale Electricity Spot Market,” the company said.

Meralco earlier said the new supply deals will lower power generation rates by as much as 50 centavos per kilowatt-hour (kwh).

The PSAs, without accounting fuel price escalation, will average P4.67 per kwh in 2013, lower than the P5.48 per kwh under existing contracts.

The lower costs will be passed on to end-users, Meralco said.

SPPC is the administrator of the electricity production of the 1,200-MW Ilijan natural gas power plant in Batangas while SEM-Calaca owns and operates the 600-MW Calaca coal-fired thermal power plant.

Masinloc Power of US firm AES Corp., for its part, owns and operates a 600-MW coal-fired power generating facility in Masinloc, Zambales.

SMEC manages the output of the 1,294-MW Sual coal plant in Pangasinan while Therma Luzon owns a 764-MW coal-fired plant in Quezon province.

Meanwhile, Meralco is still keen on acquiring more distribution utilities in the country.

“All we can say is we continue to explore opportunities: acquiring, buying into, seeing whether we can help their operations and maintenance,” Meralco president and CEO Oscar Reyes said.