ERC clears power supply deal between Meralco, Solar Philippines

MANILA, Philippines — The Energy Regulatory Commission (ERC) has cleared the long-term power supply agreement (PSA) between Manila Electric  Co. (Meralco) and Solar Philippines Tanauan Corp., three years after the deal was executed.

In a decision the ERC said it approved a final generation rate of “P5.39 per (kilowatt-hour) kwh, subject to (two percent) annual escalation as provided in the PSA.”

ERC found the rate—which was the proposed rate of Meralco and Solar Philippines—to be reasonable since it is lower than its computed true cost generation rate of P6.941 per kwh.  The rate underwent a competitive selection process (CSP), and is lower than the prevailing solar feed-in-tariff (FIT) rates.

Previously, the ERC issued an interim relief to Meralco and Solar Philippines to implement the PSA at its applied rate but without the escalation rate.

In 2017, Meralco foresaw peaking capacity deficit in its portfolio, especially for the summer months amid expected high demand.

Solar Philippines made an unsolicited proposal to Meralco to fill that peaking supply deficit, which was subjected to a price challenge in compliance with the CSP rule.

However, there were no qualified price challengers for two rounds, which led Meralco to award the PSA to Solar Philippines.

“The PSA was executed in support of renewable energy and the rate approved by the ERC is significantly lower than the prevailing solar feed-in-tariff rates,” Meralco said.

Under the PSA, Solar Philippines undertakes to supply to Meralco electric energy generated by its solar power plant in the two locations for 20 years.

Solar Philippines said the Tanauan and Naic projects were among the first solar farms to be constructed after the end of the feed-in-tariff (FIT) with a rate of P8.69 per kwh and the first to undergo a CSP.