Meralco taps emergency power supply, but cost questioned

The country’s largest power distributor, Manila Electric Co. (Meralco), inked a short-term contract with an entity under the Aboitiz Group that would plug the gap caused by a suspended supply agreement with San Miguel Corp. (SMC).

In a statement, Meralco said it signed an emergency power supply agreement with GNPower Dinginin Ltd. for 300 megawatts (MW) of baseload capacity, or the minimum power injected into the grid, to partially cover the 670-MW contract with SMC that was earlier halted by a court.

The deal between Meralco and GNPower Dinginin, a partnership among the Aboitiz and Ayala groups and Power Partners Ltd. Co., commenced on Thursday and will end on Jan 25, 2023.

Meralco said the contract “will lessen Meralco’s exposure to the Wholesale Electricity Spot Market (WESM) and in turn partly shield its customers from volatile and potentially higher generation costs.”

But Infrawatch PH convener Terry Ridon told the Inquirer the latest supply deal was at least 38-percent higher than Meralco’s and SMC’s original contract signed in 2019 and almost 30-percent higher than the temporary price increase the two parties sought but was rejected by the Energy Regulatory Commission (ERC). GNPower’s rate is at P5.96 per kilowatt-hour (kWh).

“The onus is now on the ERC to ensure lower rates comparable to the price in the rejected joint petition. Failure to do so would clearly show a failure of leadership to protect the public interest by ensuring the least cost,” Ridon said.

Sought for comment, ERC Chair Monalisa Dimalanta said the regulator has yet to review the accord, but noted any impact on consumers’ bills would depend on how Meralco manages its supply mix. The rate would be reflected in January.

She said it was possible that the impact would be “neutral” since Meralco has already asked SMC to pay for the difference between the original contract price of P4.30/kWh and the prevailing price at the WESM.

Meralco has been sourcing from the platform since December 7. Prices at the spot market hit P9.12 per kWh as of Dec. 11.

As for the remaining 370MW of crucial power that still needs to be covered, Meralco said the issue was still “developing.”

Aside from GNPower, SMC has also offered a fresh contract that would be fulfilled by its Ilijan plant. SMC proposed P1.30 per kWh, but this excludes the amount Meralco has to pay for procuring the fuel necessary to run Ilijan.