The offer of San Miguel Global Power Holdings subsidiary South Premiere Power Corporation (SPPC) had been declared as the ‘best bid’ in the 1,200-megawatt capacity procurement of Manila Electric Company (Meralco) for a supply portfolio that will partly satiate its requirements during the El Nino-saddled summer months this year.

In a statement to the media, Meralco noted that SPPC’s offer had been at P7.0718 per kilowatt hour (kWh) – and that has been anchored on a baseload capacity or round-the-clock electricity supply that the SMC power generation company will start delivering to the utility firm immediately upon regulatory approval.

Once awarded, the capacity procurement will be underpinned by a 15-year power supply agreement (PSA), based on the terms set forth by Meralco in its competitive selection process (CSP), a bidding system employed in contracting the power supply requirements of distribution utilities.

The winning bid of SPPC has yet to go through post-qualification process, before a final notice of award shall be served by Meralco – and the next step shall be the signing of the warranted long-term PSA.

The SPPC tender bested the price-offers of two other bidders – including the P7.1006 per kWh bid of the joint venture of Limay Power Inc. and San Roque Hydropower Inc., which are also affiliate-companies of the San Miguel group and opted for prospective 150MW capacity delivery.

The other bidder had been First Natgas Power Corp. (FNPC) of the First Gen group which submitted an offer of P8.4489 per kWh for 210 MW targeted supply to Meralco.

The power utility company qualified that the offers of the two bidders were below the prescribed reserve price of P7.1538 per kWh; while the bid price of First Natgas had gone above it.

Meralco executives previously stated that the CSP for its baseload capacity purchase shall be of fuel pass-through paradigm, meaning the actual costs will fluctuate depending on the seesaw of fuel prices in the world market – especially so since the Ilijan plant of SPPC is already fueled by imported liquefied natural gas (LNG).

Meralco Vice President Lawrence S. Fernandez, who is also the chair of its bids and awards committee for PSAs (BAC-PSA) emphasized that the company complied with all the parameters prescribed by the Department of Energy (DOE) and Energy Regulatory Commission (ERC) in line with the CSP rules – including the requirement to conduct the auction process in an open and transparent manner.

“Meralco, as a highly-regulated entity, has conducted its business in full compliance with the rules and regulations promulgated by the ERC and DOE,” he stressed; specifying that their PSAs which were underwritten through CSPs shall need to secure regulatory approval prior to enforcement.

He similarly conveyed that “to further ensure transparency and fairness, CSP observers witnessed the submission and opening of bids and the proceedings were streamed live.”

This batch of power supply procurement will replace Meralco’s temporary power supply agreements that had just been implemented just within one-year duration until March this year – those were capacity purchases intended to plug its supply gap following the termination of its previous power supply deals.