MANILA, Philippines — After conducting its first successful bidding, Manila Electric Co. (Meralco) signed power supply agreements (PSAs) with Phinma Energy Corp., San Miguel Energy Corp. and South Premiere Power Corp. (SPPC) to supply 1,200 megawatts (MW) for 10 years.
The PSAs, if approved by the Energy Regulatory Commission (ERC), would be implemented starting Dec. 26.
Under the PSA, Phinma Energy will provide 200 MW with an all-in headline rate of P4.7450 per kwh and computed all-in levelized cost of electricity (LCOE) of P4.8849 per kwh.
San Miguel Energy will supply 330 MW at all-in headline rate of P4.6314 per kwh and computed all-in LCOE of P4.9299 per kwh.
SPPC would deliver 670 MW at an all-in headline rate of P4.6314 per kwh and computed all-in LCOE of P4.93 per kwh.
Meralco president and chief executive officer Ray Espinosa said the rates are way below the current generation charge of P5.88 per kwh and that the all-in rate already includes line rental and value-added tax (VAT) and the cost of replacement power for all plant outages.
He said the generators are liable to pay a fine if they are unable to deliver power. This would be used to reduce the generation cost to consumers.
“This is a great day for customers. This is a day that we are able to deliver savings to them of more than P9.4 billion a year for the next 10 years,” Espinosa said.
San Miguel Corp. president and chief operating officer Ramon Ang said they were initially hesitant to join the bidding because of the risks involved.
“We bid against the advise of our team because of the big risk and low rate, as pointed out by the finance group of our power business. But at the end, I think they realized what is important is the welfare of the consumer,” he said.
Meanwhile, Phinma Energy president and CEO Eric Francia said the bidding was a groundbreaking process and ushers a new era in securing power supply moving forward.
“I guess the biggest winner really are the consumers and no matter what we say, and Meralco also quantify those savings as much as managing risks and preserving or creating value for our shareholders,” he said.
Meralco earlier said its customers are expected to save around P0.28 per kwh or P9.46 billion for 10 years from the new PSAs.
“The success of the bidding clearly disproves recent claims that the bidding will not result in lower generation charges. Those critics were flat wrong. In the end we have to thank the DOE and DOE Secretary Al Cusi for the leadership and guidance for this historical competitive selection process,” Espinosa said.