Power utility giant Manila Electric Company (Meralco) is aiming for timely approval of the Department of Energy (DOE) on the terms of reference (TOR) for its targeted competitive selection process (CSP) on planned capacity procurements, so it can spare its roughly 8.0 million customers from wobbly or costly electric bills during the El Nino-strained summer months.

According to Meralco Vice President Lawrence S. Fernandez, the company is scheduling an auction for 1,200 megawatts of capacity to replace its existing emergency power supply agreements (EPSAs); as well as additional 400MW capacity that it is eyeing to procure via interim power supply agreement (IPSA).

“For us to be able to meet that, we’re targeting bid submission last week of January. I’d like to make it clear – that’s our target, but that’s not definite because we’re waiting for the DOE approval on (the) TOR. And we’re hoping that the DOE will approve as soon possible so we can make the target definite,” he indicated.

The CSP is a sanctioned bidding system that utilities will have to adhere to in their procurement of capacities to satiate their supply requirements – and that shall be underpinned with power supply agreements (PSAs) that are anchored on ‘least cost’ contracting parameters.

“The 1,200MW will be part of our power supply for the summer months, because our emergency PSAs are just for one year,” the Meralco executive stated, adding that the expiry dates of their contracts will be by March to April next year.

He further noted “the 400 MW one-year IPSA, that has been filed with the DOE (Department of Energy) and we’re waiting for the DOE approval.”

Fernandez expounded the utility firm will also need to procure additional 250MW of peaking capacity – and that is intended to cover sudden uptick in demand especially at the duration of the scorching summer months.

The Meralco executive emphasized all of these targeted capacity contracting had been integrated in the Power Supply Procurement Plan (PSPP) that the utility firm had submitted to the energy department.

Beyond the conduct of competitive bidding for the programmed supply procurements, he specified that the added hurdle will be on regulatory approval – primarily if these cannot be done prior to the lapse of their EPSAs by March 2024.

“If the ERC (Energy Regulatory Commission) will not approve the power supply agreements, then we cannot implement them,” he said, emphasizing that the recourse would be to secure supply from the Wholesale Electricity Spot Market Market (WESM) but that will come at the expense of unduly exposing their customers to highly probable rate spikes – particularly within the stretch of the summer months.

“We don’t want to speculate, but the WESM prices at the time will be high. But we will have to follow the rules on the CSP and PSA approvals, and we are going through these processes in our supply procurements for our PSAs. If there’s no approval, then we cannot implement,” he stressed.