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Manila Bulletin devider Business devider Meralco, San Miguel unit secure 15-year power supply deal

Meralco, San Miguel unit secure 15-year power supply deal

Published Dec 13, 2024 06:26 am

The Energy Regulatory Commission (ERC) has approved the 15-year Power Supply Agreement (PSA) between Manuel V. Pangilinan-led Manila Electric Company (Meralco) and Excellent Energy Resources, Inc. (EERI), a subsidiary of SMC Global Power.

In a statement on Friday, Dec. 13, ERC Chairman and Chief Executive Officer Monalisa Dimalanta stated that the approval comes with conditions to ensure fairness and protect consumers from fuel price volatility.

Dimalanta said these conditions aim to mitigate the impact of fluctuating fuel and freight costs on consumers.

"Many of those are standard conditions, but we needed to add new ones. Some of these are intended to mitigate the volatility of fuel and freight costs that are passed on to consumers," she said.

The approval includes several conditions. First, EERI must be responsible for supplying replacement power, while Meralco will only cover the actual cost based on approved fees.

Second, any planned increases in power rates must receive approval from the ERC to ensure they remain affordable for consumers.

Third, if EERI intends to reduce or transfer contracted capacity that would result in a higher blended rate, they must obtain prior approval from the ERC. However, if the adjustment leads to a lower blended rate, Meralco and EERI are only required to inform the ERC.

Fourth, EERI cannot pass on interest, penalties, or other charges to Meralco's customers.

Lastly, the approval is subject to ongoing review by the Philippine Competition Commission (PCC) regarding any changes to EERI's ownership and the gas terminal.

Dimalanta explained that Meralco's subsidiary, MGen, will become a part-owner of EERI and Chromite Gas Holdings, a joint venture of SMC, Aboitiz Power, and MGen.

"Given that MGen will be a part-owner if the transactions are approved, depending on the action of and conditions imposed by PCC (if any), we may need to revisit compliance with the Market Share Limitations, bilateral contracting limits, and requirements on DUs engaged in other businesses under EPIRA," she added.

The ERC confirmed that the total base rate for the PSA is P6.0038.

Related Tags

San Miguel Corp. (SMC) Manila Electric Co. (Meralco) Energy Regulatory Commission (ERC)
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