The Energy Regulatory Commission (ERC) has approved the withdrawal of application for the power supply agreements (PSA) that had been jointly agreed to be terminated by parties-in-interest Manila Electric Company (Meralco) and the subsidiary-companies of SMC Global Power Holdings Corp (SMGP) of the San Miguel group.

“We already granted their request for withdrawal of the application. That was already approved,” ERC Chairperson Monalisa C. Dimalanta said.

The ERC chief explained that the approval of the contracts’ termination had been based on the “lapse of the longstop date argument” that both Meralco and the SMC firms have expressly stated in their application with the Commission.

“We asked Meralco to demonstrate or explain, did you ask them to extend - at least fight for the customer? And it (Meralco) said that it did twice. But on the third time, that’s when the supplier-firms already gave up,” she narrated.

The power supply deals covered 1,800 megawatts capacity that would account for the supply portfolio shoring up of Meralco starting end-2024 – primarily for its requirement of mid-merit and baseload capacities.

Baseload capacity would refer to electricity supply that shall be made available to Meralco on 24-hour duration; while mid-merit capacity accounts for that chunk of supply that can be easily ramped up and down when there is fluctuation of demand in the system.

It was in March this year when the notices of termination had been lodged by SMC’s Excellent Energy Resources Inc. (EERI) for the 1,200MW of gas-generated capacity due for delivery in December 2024; and the PSA for 600MW from Masinloc Power Partners Co. Ltd. that had been scheduled for commercial operations date (COD) in May 2025.

Dimalanta emphasized that since the capacities of the terminated contracts had not been replaced yet, the next round of competitive selection process (CSP) to be undertaken by Meralco shall already be covered by the revised CSP guidelines rendered by the ERC, which has been anchored on the policy frame first issued by the Department of Energy.

“That’s why we provided PSA templates so we’re all guided what is the expectation among the parties when you terminate,” the chief regulator stressed.

CSP is an auction process that the DUs will have to adhere to when they will contract for their supply – and they are mandated to go for the ‘least cost’ in their power supply deals.

Dimalanta similarly reminded distribution utilities (DUs) that if they will enter into power supply contracts, they have to “define the terms and comply also - enforce the terms of their PSA.”

She added “this goes not just for private DUs but also for ECs (electric cooperatives) because we have ECs that we feel like they need to also make sure that the terms of their contract are observed or respected.”

Onward, Dimalanta noted that the DUs are already required “to record the proceedings and submit the recording of all proceedings related to CSP as part of their application.”