Meralco to proceed with 2nd CSP round

MANILA, Philippines — Manila Electric Co. (Meralco) will to proceed with the second round of its competitive selection process (CSP) for the 1,200-megawatt (MW) greenfield capacity.

However, it will not accede to all changes proposed by the Department of Energy (DOE) in the terms of reference (TOR) for the competitive bidding.

“The DOE came up with the suggestion in terms of our CSP for the second round of 1,200 MW. We have studied the suggestions of the DOE…we’re looking at our first publication within the week,” Meralco president and chief executive officer Ray Espinosa said.

Last month, Meralco conducted the CSP for the 1,200-MW greenfield capacity but it was declared a failed bidding after only Atimonan One Energy Inc., a unit of Meralco Powergen Corp. (MGen), submitted its offer.

In order to have a successful CSP, the DOE asked Meralco to change some of the terms in the CSP.

“One of the suggestions of the DOE is to allow old existing plants to bid as well for this 1,200 MW capacity, (which is)quite different from the (first pronouncement of the) DOE when we started out,” Espinosa said.

“We’ve considered the DOE proposal and are minded basically to proceed on the basis of what we have set out originally which is to differentiate the brownfield from the greenfield,” he said.

Under the CSP for greenfield capacity, the power supply agreement (PSA) covers the supply of 1,200 MW for 20 years starting 2024.

The decision to proceed this way again was to promote the construction of new capacity to boost the supply in the power grid at the least cost possible.

In initial discussions with Meralco, the Department of Energy emphasized the government’s thrust to ensure energy security and stability through the building of new power plants.

The construction of new plants would also widen the margin between demand and supply, which remains tight, Meralco chairman Manuel V. Pangilinan said.

“As indicated, we want to promote energy security for the country…I think we’re still at a rather tight margin supply to demand in terms of available supply capacities,” he said.

Pangilinan said the company’s power generating arm is willing to participate in putting up more plants ranging from coal to renewables.

“We want to widen that margin and promote more capacity, making the WESM (wholesale electricity spot market) more vibrant,” Pangilinan said.

In accommodating more prospective bidders, Meralco relaxed the terms of the second round of CSP by lowering the power plant’s configuration and moving away from a single location requirement.

“Before, we only had blocks of plant configuration of 600 MW. Now, we have brought down the plant configuration down to 150 MW. A power generation could have 150 MW units go all the way up to 1,200 MW as opposed to just a block of 600 MW or 1,200 MW,” Espinosa said.

“We have also moved away from single location requirement, basically allowing multiple requirements. Again, to make sure those who are willing to bid for a 1,200 MW greenfield have the ability to put up these plants in multiple locations,” he said.