Meralco bidding for 500MW supply seen to result in consumer savings

The Manila Electic Co. (Meralco) has successfully bidded out three power supply contracts for a 500-megawatt (MW) requirement in the next five years.

In a statement late Wednesday, Meralco said the successful competitive selection process (CSP), done on Sept. 11, will result in additional savings and lowest cost to consumers.

Meralco said the CSP was administered by the Third-Party Bids and Awards Committee (TPBAC) that was constituted pursuant to the Department of Energy (DOE) Circular requiring distribution utilities to procure power through competitive bidding.

After the opening and evaluation of the bids,  the TPBAC declared the bids submitted by First Gen Hydro Power, Phinma Energy, and South Premiere Power to be the “best bids.”

First Gen Hydro Power Corp.’s bid was for contract capacity of 100 MW with an all-in headline rate (VAT inclusive) of P5.1908 per kilowatt-hour (kWh) and computed all-in Levelized Cost of Energy (LCOE, VAT Inclusive) of P5.3989/kWh.

Phinma Energy Corp.’s bid was for 110 MW at all-in headline rate (VAT inclusive) of P5.5858/kWh and computed all-in LCOE (VAT Inclusive) of P5.5858/kWh.

South Premiere Power Corporation's bid, meanwhile, was for 290 MW and had an all-in headline rate (VAT Inclusive) of P5.5347/kWh and computed all-in LCOE (VAT inclusive) of P5.7527/kWh.

Meralco said that the bids’ all-in rate already includes line rental and VAT and the cost of replacement power for all plant outages.

The power generation companies will also be liable to pay a fine if they are unable to deliver power, which will be used to reduce the generation cost to the consumers, it said.

The resulting prices from the CSP are significantly lower than their average generation cost today of around P5.88/kWh (VAT inclusive), according to Meralco.

“Along with the results of first successful CSP, consumers are projected enjoy total savings of around P13.86 billion per year, or a rate reduction of P0.41/kWh,” Meralco said.

The savings for a typical household of P0.41/kWh translates to annual savings of around P984 per year.

Meralco noted that the best bids will now undergo post-qualification and the TPBAC is expected to issue the respective notices of award in favor of those who satisfactorily passed post-qualification on Sept. 12, to be followed by the signing of the Power Supply Agreements with the company next week.

The contract to supply Meralco 500 MW of mid-merit capacity will be effective December 26, 2019 for a term of five years.

The bidding for the 500 MW was witnessed by representatives from the DOE, according to Meralco.

According to Meralco, the TPBAC is chaired by Atty. Ferdinand Domingo, who was selected as representative of consumers, together with Atty. Adrian Cristobal Jr., another consumer representative.

Cristobal was a former Secretary of the Department of Trade and Industry.

The process for the selection of the consumer representatives was approved by the DOE, Meralco said. —Ted Cordero/LBG, GMA News