The Department of Energy (DOE) has greenlighted the terms of reference (TOR) for the procurement of additional power supply by Manila Electric Company (Meralco)to serve its peaking requirements, especially in the summer months.

The giant utility firm announced to the media that the targeted competitive selection process (CSP) for the power supply agreement of a 170-megawatt peaking capacity will be February next year.

The policy on conducting CSP for power supply agreements underwritten by distribution utilities, like that of Meralco, was upheld in a Supreme Court ruling in 2019 wherein the servicing power utility can choose technically qualified suppliers with the lowest-cost offer for their capacity requirement.

According to Atty. Jose Ronald V. Valles, head of Meralco’s Regulatory Management Office, the additional supply purchase “will help Meralco ensure availability of reliable and cost-competitive supply, which is especially critical during the 2022 dry months and the upcoming national elections.”

He qualified that the timely approval of the bidding’s TOR “will allow us to proceed with the emergency procurement for the supply needed to meet the anticipated increase in demand in the coming months.”

For this batch of supply purchase, the third party bids and awards committee (TPBAC) of Meralco indicated that the deadline for the submission of expression of interest will be on January 5, 2022; while submission of final bids will be on February 2, 2022.

A pre-bid conference, that will provide a venue for interested parties to raise questions or concerns relating to the power supply purchase and the corresponding PSA, is also slated on January 12, 2022.

The PSA for the capacity procurement will cover a five-month period from February 26, 2022 to July 25, 2022 – which will also be the timeframe when demand will be hitting peak because of rising weather temperatures as well as the polling period in next year’s national elections.

By cornering supplemental supply, customers of the country’s biggest utility firm can at least have a guarantee they will not suffer rotational blackouts when demand for power will be rising exponentially, a typical pattern during summer months.

The other dilemma of the consumers on such period will be higher electricity rates because when supply tightens, settlement prices in the Wholesale Electricity Spot Market (WESM) will consequently track upticks.

The need for beefed up supply during the summer months and the election period will be a very critical commitment for the DUs to ably provide for, especially so since forced outages of power plants tend to recur and they often trigger highly probable electricity service interruptions.