PCC green-lights New Clark City power distributor

The Philippine Competition Commission (PCC) has approved the proposed joint venture between the state-owned Bases Conversion and Development Authority (BCDA) and the consortium of Manila Electric Co. (Meralco) and its Japanese partners to develop a power distribution system in New Clark City.

Citing its decision issued on June 25, the PCC said Wednesday the proposed joint venture “has been found to not likely result in a substantial lessening of competition in the retail electricity supply market within New Clark City and the distribution utility market of generated electricity through a supply agreement in the Luzon and Visayas grids.”

The BCDA and the Meralco-Marubeni group will distribute power to the host of locators and facilities in New Clark City for an initial period of 25 years, the antitrust body said.

The Meralco-Marubeni consortium will own 90% of the joint venture’s equity, and the BCDA 10%.

The consortium comprises Meralco, Japanese partners Marubeni Corporation, The Kansai Electric Power Co. Inc., and CHUBU Electric Power Co. Inc.

The BCDA awarded the Meralco-Marubeni consortium the contract for the power distribution system in New Clark City last January. It submitted the lowest tariff bid of P0.6188 per kilowatt hour, besting the P0.9888/kwh bid by the Aboitiz-KEPCO Consortium comprising the Olongapo Energy Corp. and KEPCO Philippines Holdings Inc. 

The New Clark City may give rise to establishments or units that are qualified to choose their own retail electricity supplier, the PCC noted. These potential “contestable customers” will be able to choose their own power provider, not necessarily the joint venture company.

The antitrust body said it expects an influx of potential locators, particularly agro-industrial and institutional clients, to qualify as contestable customers.

Contestable customers are consumers with an average monthly consumption of at least 750-kilowatts (kW) and are deemed by the Department of Energy (DOE) as qualified establishments to participate in its Electricity Open Access Scheme and choose their own Retail Electricity Supplier.

The retail power suppliers may be from anywhere in the country and may compete for would-be qualified locators with specific electricity requirements. 

The PCC noted in its decision that the Competitive Selection Process (CSP) of the DOE ensures other distribution utilities and electric cooperatives may compete with the joint venture company in securing electricity from power generators.

It considers the CSP as an important competitive step in securing power supply agreements that would constrain the joint venture’s ability to foreclose other power generation companies.

The competitive constraints posed by other generation companies to limit the joint venture company’s ability to foreclose other distribution utilities and electric cooperatives have been observed and noted by the PCC.

The antitrust body previously approved two other key transactions vital to the development of the 9,450-hectare New Clark City:

The joint venture between BCDA and MTD Capital Berhad for the National Government Administrative Center

The joint venture between BCDA with the consortium of PrimeWater Infrastructure Corp., Tahal Consulting Engineers, Ltd., Prime Asset Ventures, Inc., and MGS Construction Inc. for the water and wastewater management in the city.

New Clark City—located within the Clark special economic zone spanning Angeles City in Pampanga and the towns of Capas and Bamban in Tarlac—will have the first completely smart power grid in the country.

Supported by state-of-the-art facilities comparable with other smart cities throughout the world, the New Clark City smart grid also has better reliability standards, according to the BCDA

Locators can access real-time information from the distribution utility, allowing them to manage their electricity consumption more effectively, the BCDA said earlier.

Phase 1 of the New Clark City development covers the construction of the National Government Administrative Center, and world-class sports facilities for the Southeast Asian Games to be hosted by the Philippines in 2019. —Ted Cordero/VDS, GMA News