Consumers save P10.7 billion from Meralco’s summer deal

MANILA, Philippines — Manila Electric Co.’s (Meralco) purchase of emergency power supply during the summer season has resulted in about P10.7 billion in cost savings for its eight million customers.

To address imminent supply deficiency, Meralco was constrained to conduct a negotiated procurement of an emergency power supply agreement (EPSA) involving 1,200-megawatt (MW) baseload requirements.

In a filing with the Energy Regulatory Commission (ERC), Meralco said it received an offer from San Miguel subsidiary South Premiere Power Corp. (SPPC) covering a one-year supply deal effective March 26 this year.

This EPSA, the power distribution giant noted, was secured in the “interest of providing supply in the least cost manner” to consumers, averting their exposure to the volatile prices at the Wholesale Electricity Spot Market (WESM).

According to Meralco, the annual delivered rate of P6.6128 per kilowatt-hour was way lower than the effective cost of P7.6386 per kWh if the equivalent capacity was sourced from WESM.

Its average blended generation rate was also reduced by about P0.2919 per kWh, resulting in multi-billion-peso savings to consumers.

Under ERC guidelines on competitive selection process (CSP), the EPSA “shall be immediately implementable” without the need of a provisional authority and interim relief, provided that certain conditions are met.

Meralco said it has sufficiently complied with the CSP guidelines for the negotiated procurement of emergency supply needed to ensure “reliable and continuous” electric service to its customers.

Earlier, SPPC was declared the winning bidder for Meralco’s procurement of the 1,200-MW baseload supply.

However, Meralco was prompted to seek an emergency supply in case the ERC approval or provisional authority for its PSA with SPPC is not timely secured.

In June, the power regulator announced that it granted provisional authority for the PSA between the two firms, with Meralco getting supply of 910 MW at a base rate of P5.9282 per kWh.

The remaining 290 MW, meanwhile, was said to be bound by an earlier contract the commission previously authorized.