Meralco, 2 others seek new power supply deals

MANILA, Philippines - Three power companies are seeking the nod of the Energy Regulatory Commission (ERC) for supply agreements seen to help augment the tight power situation in the first half of the year.

In an application filed recently with the ERC, Manila Electric Co. (Meralco), the country’s biggest power distributor, and power generators Panay Power Corp. and Toledo Power Corp. want to enter into power supply contracts.

Specifically, Meralco wants to source up to 28 megawatts from Toledo Power  on a firm basis and an additional nine MW on a non-firm basis and up to 27 MW from Panay Power Corp.

Toledo Power, a unit of Aboitiz Power, the power generation arm of the Aboitiz Group, owns and operates a 40-MW diesel-fired power plant in Toledo City, Cebu. Panay Power Corp. is owned by Global Business Power Corp. of the Metrobank Group. It owns and operates a 72-MW diesel-fired power plant in La Paz, Iloilo City.

In their application, the firms cited the power situation outlook for 2015 as the main reason for the interim power supply agreement.

“Based on the power situation outlook for 2015 of the system operator, NGCP, for the period of Jan. 26 to July 2015, the reserve capacity will be below the required contingency reserves due to scheduled maintenance shutdowns and forced outages of major baseload coal and gas-fired power plants in Luzon,” they said.

NGCP data showed that as early as this month, reserves may fall to 845 MW, which is below the required reserves of 1,604 MW.

Supply will be tighter in the summer with peak power demand forecast at 9,011 MW, which  is expected in May. This is 300 MW higher from the 2014 peak demand of 8,717 MW.

The companies said without the interim power supply agreements, Meralco may be constrained to source from the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity, where prices are volatile.

“If these IPSAs are not implemented during the said period when the reserve capacity will be below the required contingency reserves, Meralco will be constrained to source from the WESM where prices are volatile especially during the summer months of 2015. This can be further aggravated and would likely result in higher WESM prices in light of the very tight supply under thin reserve margin conditions,” the parties said in their application.

Once approved, the parties said the agreement shall become immediately effective upon execution and shall expire on July 25, 2015 due to scheduled maintenance shutdowns and forced outages of major baseload coal and gas fired power plants in Luzon.