Meralco suspends plan to secure emergency power supply deals

Manila Electric Co. (Meralco) has set aside for now its plan to procure emergency power supply deals that would allow it to continue providing electricity to its 7.6 million customers after its current supplier, San Miguel Global Power Holdings Corp., signaled its intention to honor current money-losing contracts under protest.

Meralco’s head of regulatory management Jose Ronald Valles said their petition to exempt the emergency power supply agreements (Epsas) from undergoing a competitive selection process has thus been “put on hold.”

“Because they are now supplying power to Meralco continuously up to this time, there is no need for Epsas at the moment. But [the emergency supply petition is] still pending at the Department of Energy and it has not been withdrawn,” he said.

Valles said San Miguel had signified its intention to honor their contracts, albeit under protest.

The country’s largest electricity distributor and retailer said it would only manifest to regulators its opposition to any move by San Miguel to terminate its power supply deal with Meralco once the conglomerate has actually served a notice of termination.

San Miguel and Meralco had earlier tried, but failed, to get energy regulators to allow them to charge higher energy fees from the public to account for sharp fuel price increases in the wake of Russia’s invasion of Ukraine early this year.

“If San Miguel will pursue termination of the two contracts, then we have to await a notice of termination from them. And once we receive that notice of termination from San Miguel, we will immediately manifest to the Energy Regulatory Commission our opposition to the termination and request guidance from the ERC to resolve the matter,” he added.

Alternative sources

To recall, the ERC denied the joint petition of Meralco and San Miguel Global Power for a temporary rate hike and was instead reminded of the obligations under their power supply agreements (PSAs).

Under the deal, San Miguel Global Power units South Premiere Power Corp. and San Miguel Energy Corp. deliver electricity to Meralco generated from its natural gas-fired power plant in Ilijan, Batangas, and coal-fired power plant in Sual, Pangasinan, respectively.

Prior to the regulator’s decision, Meralco had sought to find alternative sources of energy, hoping to avert the potential impact of San Miguel’s termination of its supply contracts.

It solicited offers and entered into emergency supply deals with other generation companies, which offered to provide a combined capacity of 1,070 megawatts.

These are SEM-Calaca Power Corp. (200 MW), GNPower Dinginin Ltd. Co. (300 MW), Masinloc Power Partners Co. Ltd. (250 MW), SMC Consolidated Power Corp. (200 MW) and SPPC (120 MW).

The power companies made the appeal as San Miguel incurred losses of as much as P15 billion since last year for operating the two power plants due to rising fuel prices. INQ