Meralco launch CSP for 1,200 megawatt greenfield capacity

MANILA, Philippines — Manila Electric Co. (Meralco) will launch its competitive selection process (CSP) for the 1,200-megawatt (MW) greenfield capacity next month.

“We’re confident with the way the TOR was developed. It should attract a good number of qualified, serious bidders,” Meralco president and chief executive officer Ray Espinosa said.

Last week, Energy Secretary Alfonso Cusi said there was already a meeting of the minds between the DOE and Meralco regarding the TOR of the 1,200-MW greenfield capacity CSP.

Meralco regulatory affairs head Jose Ronald Valles said the power distributor has received the go ahead of the DOE to publish the TOR of its latest bidding process.

“We received recently the letter of the [DOE] secretary confirming that they have granted our request for clearance to publish. The third party bids and awards committee of Meralco is currently going over the revised TOR and we wait for their advise as to when will this be published,” he said.

But before it finally publishes the TOR, Meralco has to iron out a concern from GNPower, an interested power generator,  about the replacement power item and obligations related to outages.

“The concern raised by GNPower was about the obligation for replacement power. They are saying that the generator, prospective bidder, can not afford to have zero outage allowance. They are asking for 30 days scheduled maintenance and 15 days forced outage allowance to be reflected in the TOR,” he said.

In the previous power supply agreements of Meralco,  the distribution utility has the obligation to procure the replacement power and charge that replacement power to consumers within the 30-day and 15-day outage allowances.

But beyond outage allowance, the power generator is obligated to procure that replacement power at their own risk, Valles said.

The zero outage was one of the DOE’s suggestions to protect consumers from higher rates especially during tight supply, that’s why Meralco needs the department’s clearance.

“[We’re raising it to the DOE because they required it, they have their reasons but the bidders are saying, what about the investors, the power supplier. It was a commercial industry practice before it was changed by the DOE,” Espinosa said.

Once the zero outage allowance and replacement power concerns are addressed,  Meralco will immediately publish the TOR.

“After that, we should be good to go, we will publish and then we will conduct the bidding within the timeframe laid out in the DOE circular,” Espinosa said.

“We want new capacities to come in, the sooner the better and we must encourage investors to build new plants. That’s why it became important to work out a good terms of reference so we can attract more bidders,” he said.

In September last year, Meralco conducted the CSP for the 1,200-MW greenfield capacity but was declared a failed bidding after only Atimonan One Energy Inc., a unit of Meralco Powergen Corp. (MGen), submitted an offer.

After the failed bidding, the DOE directed Meralco to open the second round of its CSP to all power plants—whether old or new—to truly allow competition and get the least cost of power for consumers.

Last December, Meralco started soliciting bids for the second round of its CSP for the 1,200-MW greenfield capacity required by 2024 with relaxed rules.