Meralco secures emergency power supply from Aboitiz
MANILA -Listed power distributor Manila Electric Co. (Meralco) inked a short-term emergency supply deal with the Aboitiz Group to secure 370 megawatts of electricity for the service area of the Philippines’ largest power distributor.
The emergency power supply agreement (ESPA) between Meralco and Therma Luzon Inc. (TLI), a unit of listed Aboitiz Power Corp., was priced at P8.1447 per kilowatt-hour (kWh).
The yearlong ESPA was signed on April 12 but Meralco announced it only recently.
The latest accord was an addition to the prior ESPA of Meralco and San Miguel Corp. subsidiary South Premiere Power Corp. (SPPC) which was signed last month.
The indicated capacity under the Meralco-SPPC deal was raised to 480 MW last April 1 following failed bidding on the second round of the competitive selection process involving 180 MW of baseload (or uninterrupted) requirement and negotiations with the San Miguel unit.
Meralco already secured certifications from the Department of Energy exempting them from holding competitive bidding to secure additional power and implement such an agreement immediately.
Meralco first vice president and head of its regulatory management office Jose Ronald Valles explained the recent ESPAs are intended to mitigate the exposure of customers to higher power rates if electricity is procured from the Wholesale Electricity Spot Market (WESM).
WESM is the central venue for trading electricity as a commodity. Power generators sell their excess capacities not covered by contracts to this spot market and distributors purchase additional capacities to augment their primary supply.
Historically, WESM prices tended to be higher and more volatile which can translate to higher electricity rates that customers need to pay for.
According to the Independent Electricity Market Operator of the Philippines which operates WESM, the spot market rate in Luzon and Visayas rose by 16.8 percent to P7.68 per kWh as of April 23.
Meralco was forced to forge ESPAs with various power companies after the Court of Appeals put on hold the implementation of its 2019 supply deal with SPPC covering 670 MW capacity.
Previously, the firm had executed two ESPAs with GNPower Dinginin Ltd. (GNPD), a joint venture of the Aboitiz and Ayala groups, for 300 MW baseload capacity. The accord with GNPD was not extended after it ended.
