Meralco to conduct another bidding for power supply

MANILA, Philippines — Manila Electric Co. (Meralco), the country’s largest power distributor, is launching another bidding for about 1,500 megawatts (MW) of power supply later this year.

Alongside the new capacities needed, the power distributor would also rebid 1,200 MW of greenfield supply once the terms of reference are tweaked to accommodate more generation companies (gencos), its top official said.

Meralco president and CEO Ray Espinosa said the power distributor needs to auction off more contracts as supply remains tight in the succeeding years.

“If you look at our power development plan, it’s already laid out for several years,” he said. “I think the next one, after first batch, we’re looking at another 1,500-MW.”

The Meralco official said the distribution utility (DU) needs to add more greenfield capacity in its portfolio to ensure the supply of stable power to its growing customer base.

“We have to understand that we also have to ensure that new plants are built to replace the old ageing plants, because the old ageing plants, those are the plants that go down more frequently. And that affects basically the stability of power within the franchise area,” Espinosa said.

“There must be a conscious effort on the part of the DU to make sure there’s a good mix of brownfield and greenfield,” he said.

Meralco is still studying whether the additional capacity needed would be bid out in one go or under several contracts.

The power distributor concluded last week the first batch of its competitive selection process (CSP), composed of three bids for a total of 2,700-MW capacity.

It successfully conducted the 1,200-MW brownfield supply and 500-MW mid-merit supply, but the search for another 1,200-MW supply from greenfield projects was declared a failure of bidding.

In the first auction, Phinma Energy Corp., San Miguel Energy Corp. and South Premiere Power Corp. (SPPC) offered the least cost bids for the 10-year, 1,200-MW brownfield supply.

Meralco had signed power supply agreements (PSA) with the three gencos last week.

It is also set to sign PSAs with First Gen Hydro Power Corp., Phinma Energy Corp., and SPPC today for the five-year 500-MW mid merit supply.

The PSAs, if approved by the Energy Regulatory Commission, would start implementation 

to be the least cost offers to provide 500 MW of mid-merit supply for five years starting Dec. 29.

Meanwhile, only Atimonan One Energy Inc., a unit of Meralco Powergen Corp., submitted its offer for the greenfield capacity, which the third party bids and awards committee declared a failed bidding.

For the failed bidding, Espinosa said the company is evaluating its steps to conduct a successful CSP for the 1,200-MW greenfield supply.

“We are studying how to go about it. We want all gencos to join but we have considerations why the terms of reference for the greenfield supply are stringent. So, we will see,” he said.

Meralco had received various comments from interested gencos for not joining the bid.

For one, San Miguel Corp. president and COO Ramon Ang said circulating fluidized bed (CFB) coal-fired power plants are not allowed to join the auction.

“We did not join the greenfield because CFB plants do not meet the requirements. If they will let us join, that’s a level playing field,” he said.

“Meralco should let us join to give the best deal, best price to consumers,” Ang said.

Meralco requires gencos with high efficiency, low emission technology to participate in the CSP for the 1,200-MW greenfield supply.

Meanwhile, Aboitiz Power Corp. COO Emmanuel Rubio said the terms of reference were too strict that it won’t be able to meet price asked for by Meralco.

“It exposes the generators to risks, especially fuel risk,” he said. “If we price the risks, we’ll be out of the reserve price.”

These comments are being taken into consideration by Meralco, Espinosa said.

“We have to study all of their comments and then see what is the best way for us forward to ensure it would be a successful bidding. We will be doing that study,” he said.