Meralco secures emergency power supply

Richmond Mercurio - The Philippine Star

MANILA, Philippines — The Manila Electric Co. (Meralco) has secured emergency power supply deals with various generators in case that the termination of its power supply agreements with SMC Global Power Holdings Corp. (SMCGP) pushes through, but the electricity distribution giant warned these may result in even higher electricity rates for its customers.

“We believe that preserving the existing power supply agreements  (PSA) with two San Miguel plants will be the least cost option for our consumers,” Meralco vice president and head of utility economics department Lawrence Fernandez said in a briefing yesterday.

In preparation for the possibility that the termination of the company’s PSA with SMCGP pushes through by next month, Fernandez said Meralco has procured supply from emergency PSA with four to five different generators.

“While we accepted their offers, there is always that contingency that if the SMC power supply agreement is not terminated, we will not push through with the emergency supply deals,” Fernandez said.

For the emergency PSA, Fernandez said the weighted average offers from the different suppliers were between P7 and P8 per kilowatt-hour (kWh) for one year supply starting October.

This is compared to the rates of between P4 and P5 per kWh from its power supply deals with South Premiere Power Corp. and San Miguel Energy Corp, which does not yet include the incremental fuel cost being claimed by the power plants, which is around P1.60 per kWh.

“We are very hopeful that if they are allowed to collect that amount, they  will continue the PSA and we will have a status quo. But if SMC goes on and terminates the power supply deal, then the alternative is to procure with the emergency PSA,” Fernandez said.

South Premiere Power and San Miguel Energy, administrators of the Ilijan and Sual plants, respectively, had already issued notices of termination to Meralco of their PSA, citing unexpected and unprecedented “change in circumstance,” including sky-rocketing global fuel prices brought about by multiple factors, such as the war in Ukraine.

The termination is effective starting Oct. 4, if no relief is given, SMCGP earlier said.

SMCGP earlier warned that should the Energy Regulatory Commission (ERC) fail to act on the company’s joint petition with Meralco for a temporary rate hike on its two power supply deals and the termination pushes through, electricity prices in Metro Manila and nearby provinces could go up by as much as 30 percent starting October.

The petition, which was filed last May, seeks for a temporary increase for six months for the combined capacities supplied by SMCGP’s Sual Coal Plant and Ilijan Natural Gas plant to Meralco, following the record rise in global fuel prices that were driven by economic and geopolitical forces.

“We are preparing for all possibilities, including procurement of supply from emergency power supply agreements. I think what is really important at this point is that our consumers have electricity,” Meralco vice president and head of corporate communications Joe Zaldarriaga said.

“At the end of the day, our concern is to provide our customers with 24/7 service by ensuring that we have enough electricity supply to distribute to our consumers,” he said.


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