ERC OKs termination of Meralco-SMC power deals

The Energy Regulatory Commission (ERC) has given its go signal for the termination of two power supply deals, totaling 1,800 megawatts (MW), between Manila Electric Company (Meralco) and San Miguel’s SMC Global Power Holdings Inc.

To recall, in March, Meralco and SMC Global Power’s Excellent Energy and Masinloc Power Partners informed the ERC about the power firms’ intent to terminate their power supply agreements (PSAs) for 1,200 MW and 600 MW.

In 2021, Excellent Energy and Masinloc Power both bagged 20-year contracts for the supply of 1,200MW and 600MW, which would take effect by 2024 and 2025, respectively.

“We already granted their request for withdrawal of the application [for approval],” ERC chairperson Monalisa Dimalanta said in a chance interview with reporters.

The ERC chief earlier said that both Meralco and SMC Global Power applied for approval of the PSAs in March 2021.

The ERC chief said the PSAs are not yet approved by the regulator.

Dimalanta had also noted that “no supply is currently being served yet to Meralco from these PSAs.”

In approving the termination of PSAs between Meralco and SMC Global Power’s units, the ERC chief said that the power firms applied for termination “on the basis that it’s already lapsing.”

“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 said.

Meralco earlier said the termination of the two PSAs will not have an impact on its operations.

The power distributor is also planning to reconduct a competitive selection process (CSP) for the contract capacity of 1,800 MW.

Dimalanta said that should Meralco proceed with a CSP for its required power capacity, the company has to follow the regulator’s new guidelines.

“What we recommended was for the DUs to stream CSP. They are required to record the proceedings and submit the recording of all proceedings related to CSP as part of their application,” she said.

CSP is a form of competitive public bidding for distribution companies' purchase of electricity. —VAL, GMA Integrated News