Meralco concludes another successful CSP

MANILA, Philippines — Manila Electric Co. (Meralco) has secured mid-merit supply that will further bring down power rates within its franchise following its second successful competitive selection process (CSP).

Meralco said its third party bids and awards committee (TPBAC) declared the bids submitted by First Gen Hydro Power Corp., Phinma Energy Corp. and South Premiere Power Corp. (SPPC) to be the least cost offers to provide 500 megawatts (MW) of mid-merit supply for five years starting Dec. 29.

First Gen Hydro Power’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 per kWh.

Phinma offered 100 MW at all-in headline rate (VAT inclusive) of P5.5858 per kWh and computed all-in LCOE (VAT Inclusive) of P5.5858 per kWh.

SPPC’s bid was for 290 MW and had an all-in headline rate (VAT Inclusive) of P5.5347 per kWh and computed all-in LCOE (VAT inclusive) of P5.7527 per kWh.

Meralco said the successful CSP would result in additional savings and, ultimately, least cost to consumers.

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

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

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

Meralco said the best bids would undergo post-qualification and the TPBAC is expected to issue the respective notices of award in favor of those who satisfactorily passed post-qualification.

Power supply agreements between Meralco and the generators will then be signed next week. 

Phinma Energy president and chief executive officer Eric Francia lauded the TPBAC, Meralco and DOE for providing leadership and guidance and making this a success.

“This hopefully sets the tone for many future CSPs.  The consumers won today,” he said.

TPBAC chairman Ferdinand Domingo expressed support for the CSP and the results of the process, which would redound to the benefit of consumers.

“From a consumer perspective, I am confident that these new contracts will ultimately lead to the much-needed additional power supply to address our growing demand in the country. Moreover, we achieved our objective to increase supply at lower costs. The bid prices submitted were pro-consumers. Meralco’s 6.7 million residential customers will enjoy lower rates for the next 10 years,” he said.

TPBAC vice chairman Adrian Cristobal said  the CSP is a “process that tries to combine best practices of both private and public procurement.”

“The savings for a typical household of P0.28per kWh translates to annual savings of almost P700 per year,” he said.

 It will be recalled that Meralco also successfully bid out 1,200 MW of baseload capacity last Sept. 9, which would allow consumers to save around P0.28 per kWh or P9.46 billion for 10 years from the new PSA to be executed with the winning power suppliers.