The joint venture of Aboitiz Power Corporation and AC Energy and Infrastructure Corp. of the Ayala group will be selling electricity to Manila Electric Company (Meralco) for a rate higher by P1.65 per kilowatt hour (kWh) to P5.96 per kWh compared with the cheaper P4.31 per kWh rate of South Premiere Power Corporation (SPPC) of the San Miguel group.
Meralco said this was firmed up after the signing of an emergency power supply agreement (EPSA) on Wednesday, Dec. 15, 2022 for the supply stream until January next year. The Aboitiz-Ayala tandem will be securing the 300-megawatt capacity from its GNPower Dinginin coal-fired power plant in Bataan province to be supplied to them. The higher rate would impact on the electric bills of over seven million Meralco customers post Christmas.
“Meralco executed an emergency power supply agreement (EPSA) with GNPower Dinginin Ltd. for the supply of 300MW baseload capacity effective starting today (Dec. 15, 2022) until January 25, 2023,” the giant power firm officially announced.
That capacity delivery will partly replace the supply voided from the Ilijan gas plant of San Miguel that had been stopped due to a 60-day temporary restraining order (TRO) issued by the Court of Appeals.
The power supply contract bagged by the Aboitiz-Ayala joint venture had likewise been granted with an "exemption" from a competitive selection process (CSP) by the Department of Energy.
CSP is the auction process for PSAs that would go through the approval of the DOE to ensure that a distribution utility will secure the "least cost" power supply for its customers.
According to Meralco, the EPSA for the Dinginin generating plant also has escalation indices, entailing then that it is not a fixed price contract compared with Meralco’s prevailing deal with SPPC of the San Miguel group.
Nonetheless, the power utility reiterated that “this will partially replace the 670 MW capacity under Meralco’s power supply agreement with South Premiere Power Corporation (SPPC), which was subjected to a TRO issued by the Court of Appeals.”
The 370MW balance of the capacity gap is expected to be sourced by Meralco mainly from the Wholesale Electricity Spot Market (WESM). For that capacity procurement, Meralco earlier issued a correspondence to SPPC that the "cost difference" on its spot purchases versus contract price shall be claimed from the latter.
During tight supply conditions, the EPSA for the Diningin plant may run lower than settlement prices at the spot market, but during low demand-periods which could happen during the colder months of December and January, spot prices are typically tamed at roughly P3.00 per kWh.
Meralco emphasized that it had exhausted “all measures to continue supplying its customers with sufficient and reliable power, while mitigating the impact of the TRO to its customers.”
In view of such development, Bayan Muna Executive Vice President Carlos Isagani Zarate has called the attention of the Energy Regulatory Commission (ERC) to be a “regulator for the benefit of the people and not for the profit-seeking power players,” adding that the ERC decision denying the P0.30 per kWh rate hike of SMC already turned into a perilous state of having higher pass-on cost to consumers.
"The ERC's decision last September 29 denying the proposed power rate hike petition of SMC/Meralco indeed became a case of out of the frying pan and into the fire. But, this time, the ERC benefits a different power oligarch," he stressed.