Power utility giant Manila Electric Company (Meralco) has initially cornered prospective offers of 3,310 megawatts from six (6) interested bidders on its scheduled competitive selection process (CSP) for capacity procurement of 1,800MW that will satiate its additional supply portfolio for 2024 and 2025.

According to Meralco Vice President and Head of Utility Economics Lawrence S. Fernandez, who is also the chairman of the company’s bids and awards committee for CSP on power supply agreements (BAC-PSA), the utility firm “received complete expressions of interest from six (6) potential bidders, with an aggregate offered capacity of 3,310MW.”

The power utility has not named the interested bidders for now, given the confidentially rules set forth in the CSP process for this capacity procurement.

The reserve price for the delivered headline rate and levelized cost of electricity (LCOE) for the CSP or capacity auction of Meralco shall only be revealed to qualified bidders at the deadline of submission of tenders on December 26 this year.

As specified in the tender notice, the opening, assessment and evaluation of the bid submissions will be 9:30am on December 26, 2023 through virtual video conferencing; while the pre-bid conference or the process which provides opportunity for interested parties to raise queries and clarifications on the CSP exercise will be on November 20 this year.

In the terms of reference (TOR) issued by the utility firm, it was emphasized that “the bidder's headline rate and LCOE rate are both subject to a pre-determined reserve price, which will only be revealed by the BAC-PSA to qualified bidders during the opening of the bids.”

Meralco expounded the headline rate and LCOE “shall be computed and evaluated based on a plant capacity factor corresponding to the bidder’s submitted outage allowance.”

The PSA coverage of the solicited capacity will be for a duration of 15 years from commercial operation date (COD); and the warranted delivery of the initial 1,200MW capacity shall be December 2024; although Meralco can opt for earlier capacity purchases by December 2023 and the tariff shall be anchored on a commissioning energy charge.

For the balance of 600MW, the delivery timeline is by May 2025, and it also gives Meralco the option “to take available energy up to 600 MW (net), at commissioning energy charge, starting May 2024.”

Meralco indicated that the minimum offered contract capacity per bidder shall be at least 150MW (net); and the capacity may come from a single generating facility or portfolio of plants.

The power firm stipulated that if the bidders’ total offered contract capacities go beyond the required contract capacity of 1,800MW, then “the bidder that fills up the last stack – referred to as the marginal bid offer -- shall have its offered contract capacity reduced accordingly up to the extent of the required contract capacity at its proposed tariff.”

Meralco qualified that the capacity procurement is covered by a physical power supply agreement or “physical PSA” entailing then that there is a specific plant committed to deliver the required capacity.

The power facility, the company said, shall be of ‘baseload’ state of operations, “wherein each unit of the plant must be capable of generating its rated capacity for 24 hours a day and seven days a week (24/7).”

The plants that will deliver the capacity to Meralco, is likewise required to be “in commercial operation not earlier than January 2020 but no later than May 2025.”

The bid price, Meralco noted, shall be set two-tiered and such shall comprise of fixed and variable costs -- inclusive of separate line item proposal for line rental cap or the costs associated with delivery of contracted capacities to the grid.

Meralco further apprised prospective bidders that “scheduled outage allowance and forced outage allowance shall not exceed the allowable planned and unplanned outages for similar plant technology,” as prescribed by the reliability performance indices being enforced by the Energy Regulatory Commission.

The utility firm similarly laid down terms on the provision of replacement power – including the charges and the mode of imposition of fines if the power supplier cannot provide that mandated capacity to fill in the gap if the committed plant under the PSA cannot deliver.