Meralco using higher summer demand to push power deals—CEED | Inquirer Business

Meralco using higher summer demand to push power deals—CEED

/ 05:12 PM March 22, 2018

An energy research institution has criticized Manila Electric Co. (Meralco) for pushing for the approval of power supply agreements (PSAs) with coal-fired power plant developers by using as reason the expected higher electricity demand during summer.

“Meralco and its affiliate coal companies have pushed for the approval and operation of their coal-fired power plants under the guise of protecting consumers from power outages,” said Gerry Arances, executive director of the Center for Energy, Ecology, and Development (CEED), in a statement issued on Thursday.

“These coal PSAs (power supply agreements) are being contested by the consumers themselves, with the support of environment and grassroots organizations, for spelling out higher electricity prices and a dirtier environment for the next 20 years,” Arances added.


Just three months ago, the Ombudsman had ordered the suspension of four Energy Regulatory Commission (ERC) commissioners over the anomalous coal PSAs.


Meralco and Redondo Peninsula are criticizing the delay of their coal PSAs approval but are ignoring the interests of consumers who are against coal power, Arances noted.

CEED legal and policy officer Atty. Avril De Torres also lamented the temporary restraining order (TRO) issued by the Court of Appeals against the Ombudsman’s suspension order of the ERC Commissioners.

“The TRO was issued supposedly to prevent public service disruption but this should not be used as a justification to stay the Ombudsman’s suspension order and approve the anomalous coal PSAs. The remedy should have been to appoint acting commissioners and prioritize the approval of cleaner and cheaper energy. This is how the government puts public service and consumer interest over the interests of coal companies,” said De Torres.

Arances said contracted coal power spells out higher electricity prices since coal is already more expensive than wind and solar energy.

Under the seven coal PSAs, the average rate of coal electricity is PHP 3.65/kWh, but wind and solar are at a lower rate of PHP 3.50/kWh and PHP 2.99/kWh, respectively, he noted.

As more and more countries transition away from coal, coal-fired power plants and their 20-year contracts are bound to become stranded assets, Arances said.


He cited a study conducted by the Institute for Energy Economics and Financial Analysis (IEEFA) and the Institute for Climate and Sustainable Cities (ICSC), which showed that “stranded coal assets” are a growing material risk that is inevitable in the Philippines.

Arances said that according to the IEEFA and ICSC study, trends in the coal-fired electricity generation sector, such as overbuilding coal-fired power plants, “may leave ratepayers at risk of having to pay above-market prices.”

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“If Meralco and its coal affiliates have their way in the approval and operation of their coal plants, Philippine electricity consumers would be locked into 20 years of increasing electricity prices and we would be paying for stranded asset costs of these obsolete coal plants,” Arances said. “This will also deprive consumers of cleaner and cheaper electricity from sources like renewable energy.”/au

TAGS: Business, coal-fired power plants, Meralco, power sector, power supply agreements

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