Meralco signs 1,200-MW power supply deals with Ayala, San Miguel

The Manila Electric Co. (Meralco) on Friday signed power supply deals with conglomerates San Miguel Corp. (SMC) and Ayala Corp. for a 1,200-megawatt capacity in the next 10 years.

The distribution utility signed the power supply agreements (PSAs) with Ayala-led Phinma Energy Corp. and SMC’s San Miguel Energy Corp. and South Premiere Power Corp.

The three PSAs with a total contract capacity of 1,200 MW will start supplying Meralco on December 26, 2019. The supply agreement has a 10-year term.

The 1,200-MW supply contracts comprises the following:

• Phinma Energy’s contract 200 MW with an all-in headline rate (VAT inclusive) of P4.7450 per kilowatt-hour, computed all-in Levelized Cost of Energy (LCOE, VAT inclusive) of P4.8849/kWh

• San Miguel Energy’s contract is for 330 MW at an all-in headline rate (VAT inclusive) of P4.6314/kWh and all-in LCOE (VAT Inclusive) of P4.9299/kWh

• South Premiere Power Corp.’s contract for 670 MW with all-in headline rate (VAT Inclusive) of P4.6314/kWh and all-in LCOE (VAT inclusive) of PhP4.9300/kWh

‘Least cost to consumers’

“We are confident that the prices resulting from this bidding are the least cost to consumers. In fact, the all-in rate already includes line rental and VAT and the cost of replacement power for all plant outages,” Meralco president and Ray Espinosa said.

“Also, if the generator companies are unable to deliver power, they will be liable to pay a fine, which will be used to reduce the generation cost to consumers,” he added.

“The prices from the PSAs we are signing today are significantly lower than the average generation cost today of around P5.88/kWh (VAT inclusive). Once the PSAs are implemented, Meralco consumers are expected to save around P0.28/kWh or PhP9.46 billion annually for 10 years,” Espinosa emphasized.

The Energy Regulatory Commission (ERC) needs to evaluate and process the PSA through regulatory proceedings.

The PSAs marked a successful culmination of a Competitive Selection Process (CSP) done in line with the Department of Energy (DOE) circular requiring Distribution Utilities to procure power through CSPs, according to Meralco.

The CSP was administered by a Third-Party Bids and Awards Committee constituted according to the DOE circular.

The committee is chaired by Ferdinand Domingo, representing consumers, with Adrian Cristobal Jr., also a consumer representative, who was a former secretary of the Department of Trade and Industry.

The selection process for the consumer representatives was approved by the DOE, Meralco said.

After opening and evaluating the bids on September 9, the committee declared the bids submitted by Phinma Energy, San Miguel Energy, and South Premiere Power as the “best bids.”

Following a post-qualification process, the committed issued the respective notices of award in favor of all the best bids, Meralco said. —VDS, GMA News