The GNPower Dinginin (GNPD) coal-fired power plant, which is a joint venture of Aboitiz Power and the Ayala group, is supplying 300-megawatt capacity to Manila Electric Company (Meralco) at a much higher rate of P8.5250 per kilowatt hour (kWh), according to a ranking executive of the utility firm.

The power firm acknowledged that the charge of the Aboitiz plant for the January 26-February 25, 2023 emergency power supply agreement (EPSA) is roughly double than the P4.31 per kilowatt hour (kWh) billed by the Ilijan plant of South Premiere Corporation (SPPC) of the San Miguel group when it last supplied to Meralco in November.

Further, the extended supply rate from the Dinginin plant is also more expensive than the Aboitiz group’s initial charge of P5.95 per kWh when the same generating facility first supplied to Meralco in December.

Meralco First Vice President and Head of Regulatory Management Jose Ronald Valles said

“what we signed is only for 300MW, it partly replaces the 670MW of Iljan that was the subject of injunction of the Court of Appeals.”

The utility firm executive similarly emphasized that capacity procurement from Aboitiz did not go through a bid process because “the contract that we signed with GNPD is covered by a certificate of exemption issued by the Department of Energy. We have certificate of exemption for up to 670MW.”

When quizzed by media why the rate offer of the Aboitiz plant was even higher than the P7.71 per kWh average settlement price in the Wholesale Electricity Spot Market (WESM) during the February 4-18 Malampaya maintenance shutdown when Luzon grid supply exhibited tightness, Valles indicated that “when we signed this contract, we have our own forecast of the WESM prices. Our guideline is that, if the offered tariff is lower than our forecast of the WESM, then we will sign the contract.”

Valles likewise qualified that the P5.95 per kWh GNPD charge in December was anchored on a fixed price contract; while the extension for January 26-February 25 warrants full pass-through of the fuel costs.

The Meralco executive conveyed that the rate comparison they employed in the EPSA extension had been “between GNPD and WESM, since there were no other suppliers willing to supply to Meralco for that period.”

He stated “before we signed the EPSA extension with GNPD, our forecast of WESM price was higher than GNPD’s offered tariff since there was scheduled Malampaya outage in February and there was insufficient capacity in the grid due to the non-operating status of Ilijan’s 1200MW plant.”

He added “the rate of P8.50 per kWh is just an indicative rate of GNPD considering fuel is full pass through.”

Asked if Aboitiz had adjusted its rates higher because it may have incurred losses in its first offer of P5.95 per kWh fixed priced contract, Valles noted “I can only assume that’s been their situation, that’s the reason why they adjusted their offer for a full fuel pass-through right after the P5.95 per kWh offer in December.”

When the final bill will be sent to Meralco, Valles reckoned that “the actual rate may be different depending on their actual fuel costs and forex (foreign exchange) in February supply month,” taking into account also that WESM prices appeared to have ended lower versus forecasts.

At this stage, it emerges as an industry guessing game if the Energy Regulatory Commission (ERC) will approve the escalated rate for the capacity supplied by the Dinginin plant, when it denied the P0.30 per kWh rate hike bid of San Miguel which should have leaner cost impact in the  electric bills.

The Dinginin plant’s rate is still subject for approval by the ERC, hence, various stakeholders are keeping a close watch if a regulator will favor a more costly option for the consumers.