Meralco eyes short-term power deals for Malampaya shutdown

MANILA, Philippines — Manila Electric Co. (Meralco) is planning to sit down with the Energy Regulatory Commission (ERC) to secure short-term power supply deals in time for the Malampaya shutdown and clarify rate increase due to the deployment of smart meters.

The power distributor said it needs to close interim power supply agreements (IPSAs) ahead of the shutdown of the Malampaya gas facility.

However, securing IPSAs is now challenging with the competitive selection process (CSP) policy, Meralco senior vice president Alfredo Panlilio said.

“We engage sometimes in short term IPSAs. But with the CSP, there’s a bit of complication. Unlike before, we can contract for short period of time. I think we might have to go through the process of CSP,” he said.

Earlier, Energy Secretary Alfonso Cusi said the Malampaya consortium would conduct maintenance shutdown on its facility this October.

With the CSP policy, Meralco will seek guidance from the ERC on how to secure IPSAs.

“That needs a process. Before, we have to show we negotiated and seek their approval for emergency purposes… The process now is you go through CSP, you have to give it a bit more time in terms of negotiating,” Panlilio said.

Operating since 2001, the Malampaya gas project supplies fuel to around 40 percent of gas-fired plants in Luzon namely the Ilijan, Sta. Rita plant, San Lorenzo, San Gabriel and Avion plants – which supply 3,211 megawatts (MW) to the Luzon grid.

In the past, power rates in Luzon increase when the Malampaya project undergoes shutdown since power plants use more expensive liquid fuel – diesel and condensate.

Meanwhile, Meralco will also clarify issues about the rollout of smart meters within its franchise.

The ERC earlier said it sees an increase of at least P0.23 per kilowatt-hour (kwh) in Meralco electricity bills when its Advanced Metering Infrastructure (AMI) project is approved that’s why it merits a thorough cost evaluation.

Panlilio said they would set a meeting with ERC chief Agnes Devanadera to clarify the potential rate increase with the smart meter rollout.

“What we plan to do…is to sit down with her again, show her the business case we showed in the past,” he said, noting what the power distributor presented was only a four to five centavo per kwh increase during filing.

Since then, the cost of smart meters have gone down.

“We’re redesigning the network as meter agnostic and we can hopefully bring down further meter prices,” the Meralco official said.

AMI is an integrated system of smart meters, communications networks and data management systems that enables two-way communication between utilities and customers.

The system will enable Meralco to determine what is happening in its electric grid, quickly respond to events, and restore power swiftly, thereby improve overall operational efficiency.

It will also allow customers to efficiently manage their energy usage and budget through consumption information, alerts and notifications.