Power utility giant Manila Electric Company (Meralco) is seeking the approval of the Department of Energy (DOE) for its “emergency procurement” of 220 to 260 megawatts of power capacity to augment electricity supply during the summer months.
The company said for its proposed interim power supply agreement (IPSA) with Masinloc Power Partners Co. Ltd. (MPPCL) of the San Miguel group, it wants the supply purchase to be exempted from the usual competitive selection process (CSP) given the need for immediate capacity addition within April to August because of forecasts of thinning supply in the system.
Atty Jose Ronald V. Valles, first vice president and head of regulatory management of Meralco, specified “we have already written DOE to request for confirmation of exemption from CSP and we filed the appropriate pleading at the ERC (Energy Regulatory Commission) for the approval and implementation of this extension.”
The IPSA serves as extension of the utility firm’s power supply deal with MPPCL which was cemented in 2019 and due to lapse this year.
“The contract capacity that we’re looking at is 220MW for the first six months and will ramp up to 260MW for the next six months,” Valles said.
He stated that the price of the PSA will be significantly lower at P6.9161 per kilowatt hour (kWh) compared to the cost in their original PSA which had been at P11.0022 per kWh; and it is also substantially cheaper than the previous peaking rates that the company had signed with other power suppliers.
“The replacement power during outage allowance will be shouldered by MPPCL,” the Meralco executive emphasized. MPPCL is a subsidiary of SMC Global Power Holdings Corporation of the San Miguel group, which is operating the 995MW Masinloc coal-fired plant in Zambales province.
The procurement of additional power supply for the stretch of the summer months, according to Valles, “is aligned with Meralco’s forecast that showed upcoming scheduled outages of both power plants and the SPEX-Malampaya pipeline, which may be aggravated by forced outages of power plants and gas supply restrictions, as observed recently.”
Meralco President and CEO Ray C. Espinosa qualified that they have yet to secure a definitive reply from the energy department on the proposed IPSA’s exemption from the CSP exercise.
The CSP is an auction process that power distribution firms, like Meralco, would have to comply with before they can purchase supply that will then be delivered to their customers.
Under the rules, certain developments in the power system, including required emergency procurements of power capacity, can be spared from going through CSP upon approval by the energy department.
That targeted additional capacity in Meralco’s supply portfolio, Espinosa said, “will provide us with sufficient power for the summer months, that’s why we are imploring the DOE to exempt this IPSA from the normal CSP requirement and we have made the necessary filings and representations as well with the ERC.”