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Meralco negotiating for 670MW after San Miguel ends power supply deal


The Manila Electric Company (Meralco) on Wednesday said it is negotiating with power generation companies to fill the 670-megawatt (MW) supply it lost after San Miguel’s South Premiere Power Corp. (SPPC) ended their power supply deal.

On Tuesday, San Miguel Corp. announced San Miguel Global Power’s SPPC is ceasing its 670MW power supply agreement (PSA) with Meralco, effective December 7, after the Court of Appeals issued temporary restraining order (TRO) suspending the PSA between SPPC and the power distribution company for 60 days.

“We confirm receipt of the notice of cessation of supply from SMC Global Power, covering our 670MW Power Supply Agreement with South Premiere Power Corporation which was the subject of the recent 60-day Temporary Restraining Order (TRO) issued by the Court of Appeals,” Meralco said.

For the meantime, the power distributor said it is sourcing the supply covered by the PSA from the Wholesale Electricity Spot Market (WESM).

To mitigate the risk of higher power prices due to sourcing from WESM, Meralco said it is “still negotiating with other generation companies to secure the 670 MW supply.”

Securing a new PSA will shield customers against volatile and potentially higher WESM prices, the power distributor said.

“Our priority is to ensure continuity of stable, reliable, and adequate supply for all our customers. We are exhausting all efforts to mitigate any impact of these developments on our customers’ electric bills,” Meralco said.

In a separate statement, the Energy Regulatory Commission (ERC) chairperson and CEO Monalisa Dimalanta said the cessation of the PSA between SPPC and Meralco “is not yet clear to us at this point… if SPPC served a notice of PSA termination or merely a suspension of supply considering that the case before the Court of Appeals filed by SPPC involving the said PSA is still for final resolution.”

Dimalanta said the ERC also awaits action by the agency’s statutory counsel, the Office of the Solicitor General (OSG), after the matter was referred for undertaking the appropriate legal remedy.

Based on ERC records of Meralco billings for November 2022, the 670MW SPPC PSA accounted for 13.4% of the power distributor’s supply and priced at P4.245 per kilowatt-hour (kWh).

Average WESM price, meanwhile, for the same period was at P8.47/kWh.

The ERC chief said the cessation of supply from a bilateral contract does not excuse the distribution utility from its obligation under Section 23 of Republic Act No. 9136 or Electric Power Industry Reform Act “to supply electricity in the least cost manner to its captive market.”

The CA decision stemmed from SPPC’s petition asking for temporary relief after the Energy Regulatory Commission (ERC) rejected its pleas together with San Miguel Energy Corp., and Meralco to hike generation charge amid higher prices for coal and natural gas materials used to produce electricity.

The ERC, however, said that the agreed price in the PSA is fixed by nature and the grounds for increase cited by SPPC and Meralco were not among the exceptions that would allow for price adjustment.

President Ferdinand Marcos Jr. earlier said that his administration is working at preventing the potential hike in power prices following the CA decision.—AOL, GMA Integrated News
 

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