San Miguel unit offers Meralco new 330-MW supply contract

MANILA  -After one of its units terminated a deal with distributor Manila Electric Co. (Meralco) last month to provide 330 megawatts (MW) of electricity, a unit of conglomerate San Miguel Corp. (SMC) has offered to provide the same capacity this time through a different power plant.

Meralco head of regulatory affairs Ronald Valles on Monday explained that Sual Power Inc. (SPI), formerly San Miguel Energy Corp. (SMEC), sent a notice of termination for the emergency power supply agreement (EPSA) on July 17, and that it took effect on July 24.

While Meralco had written to several suppliers to replace the power initially provided by SMEC through the Sual coal-fired plant, Valles said all of them had declined the offer and that only South Premiere Power Corp. (SPPC), another SMC subsidiary, agreed to provide 330 MW through the 1,200-MW Ilijan gas-fired plant in Batangas province.

“San Miguel made an offer, and this is what is on the table today. That will have a term until March 25, 2024,” Valles told reporters at a press briefing on Monday, adding that they were awaiting the Energy Regulatory Commission’s (ERC) provisional approval before proceeding.

SPI’s termination of its PSA with Meralco came after the Court of Appeals (CA) nullified an ERC ruling denying the rate hike petition jointly filed by San Miguel and the power distributor back in 2019.

READ: CA junks ERC ruling denying Meralco, SMC rate hike

To recall, SPI and SPPC entered into a 10-year power supply deal with Meralco in 2019 to provide 1,000 MW of capacity from the Ilijan and Sual plants.

The headline rate of Meralco’s PSA with SPI back then was at P4.6314 per kilowatt-hour (kWh), while the deal with SPPC pegged the rate at P4.2455 per kWh. In 2019, spot market prices averaged P8.47 per kWh.

However, both SPPC and SPI issued termination notices to Meralco in April last year, saying that it could no longer provide supply due to the negative impact of Russia’s invasion of Ukraine on fuel costs.

READ: SMC plant stops supplying Meralco

The case was elevated to the CA after the ERC denied both the termination and the rate hike proposal.

SPPC currently has a separate EPSA with Meralco that was signed in March for a one-year supply of 480 MW.

As for the deal with San Miguel’s Excellent Energy Resources and Masinloc Power Partners for 1,800 MW of capacity, Valles said they were waiting for ERC to accept the termination before proceeding to another round of bidding. INQ