MANILA -Distributor Manila Electric Co. (Meralco) will be signing up a new supplier of 1,800 megawatts (MW) of crucial power capacity after it gave up an earlier deal that government regulators challenged.
In a text message on Friday, Meralco head of utility economics Larry Fernandez said the rebidding was also to comply with new competitive selection process (CSP) guidelines introduced by the Energy Regulatory Commission (ERC).
“The rebidding for the 1,800-MW capacity incorporates the maximum contract duration limit mandated by the new rules,” Fernandez said.
This means that the winning party will, among others, get a maximum contract of 15 years.“The longer the contract is, the higher the uncertainty as to the pricing. The longer we go beyond that, the less confidence we have that the price is still truly [the] least cost,” ERC chair Monalisa Dimalanta said.
READ: Meralco starts bid process for 1,800MW of power supply
It will be shorter than the 20-year contracts won in 2021 by San Miguel Corp. units Excellent Energy Resources Inc. (Eeri) and Masinloc Power Partners Co. Ltd. (MPPCL) for 1,200 MW and 600 MW, respectively.In March this year, the parties filed for contract terminations, citing approval delays on the part of the ERC.
The ERC, meanwhile, said the deals were aborted “on the basis that it’s already lapsing.”
Agreement
“So we asked Meralco to demonstrate or explain, did you ask them to extend, or at least fight for the customer. They said, ‘yes.’ They did twice,” Dimalanta had said, when she was later asked if the regulator had already agreed to the decision of the parties.
Eeri had proposed to source power from its liquefied natural gas plant at P4.1462 per kilowatt-hour (kWh), while MPPCL offered to provide power via its coal-fired power plant at P4.2605 per kWh.
Asked whether the shorter supply deal would affect operations, Meralco said the new CSP guidelines were already considered in its 2023 Power Supply Procurement Plan, which the Department of Energy had approved.
Meralco on Thursday announced it had officially started the CSP following the DOE’s approval of the terms of reference for the supply agreement.
Generation companies must submit their “expression of interest” by Nov. 13, while the pre-bid conference is scheduled for Nov. 20. Bids must be submitted by Dec. 26. INQ