New power supply deals to save P4.4B, says Meralco

The Manila Electric Co. (Meralco) signed three more power supply deals which company officials said would save P4.4 billion in five years for its customers.

The agreements for a total 500 megawatts of electricity were with subsidiaries of the San Miguel, Ayala and Lopez groups — respectively, South Premier Power Corp. for 290 MW; Phinma Energy Corp. for 110 MW; and First Gen Hydro Power Corp. for 100 MW.

“We thank our generation company partners [suppliers] for offering generation rates well below the prevailing generation rates and the Meralco…price cap,” company president Rey Espinosa said during the signing ceremony held on Monday, Sept. 16, at Meralco headquarters in Pasig City.

The signing followed a similar deal last week when Meralco inked contracts also with Phinma Energy (200 MW) and South Premiere (670 MW) as well as San Miguel Energy Corp. (330 MW) — for a total of 1,200 MW.

“The contracts’ all-in rate already includes line rental and value-added tax and the cost of replacement power for all plant outages,” Espinosa said.

“The generator companies will also be liable to pay a fine if they are unable to deliver power, which will be used to reduce the generation cost to the consumers.”

The Meralco president said resulting prices from the competitive bidding were significantly lower than the average generation cost today of about P5.88 a kilowatt-hour including VAT.

“The results of today’s signing for 500 MW are expected to save consumers around 13 centavos per kwh, starting Dec. 26,” Espinosa said.

He added that, along with the results of the first batch of contracts signed last week, consumers are projected to enjoy total savings of about P13.86 billion per year, or a rate reduction of 41 centavos per kwh./TSB