Aboitiz willing to offer capacity to Meralco

SINGAPORE – Aboitiz Power Corp., the power arm of the Aboitiz Group, has available capacity that it can offer to Manila Electric Co. (Meralco) in case the 1,000-megawatt power contract between Meralco and San Miguel Corp. (SMC) is terminated.

In a chance interview here on the sidelines of the Aboitiz Data Innovation launch, AboitizPower president and CEO Emmanuel Rubio, said the decision to offer the excess capacity would depend on the Department of Energy (DOE) and Meralco.

“It will be up to Meralco and the DOE who can participate, but we have the capacity from GN Power Dinginin (GNPD),” Rubio told reporters.

GNPD is a 1,336-MW coal-fired power plant in Bataan owned by AboitzPower.

Rubio was responding to questions on whether AboitizPower would have the capacity in case the contract is terminated and is opened for rebidding.

Meralco and SMC entered into a fixed-rate power supply agreement in 2019, but have asked the Energy Regulatory Commission (ERC) for a joint temporary relief through an increase in prices. The ERC has thumbed down the petition.

The issue at hand was that Meralco and SMC were supposed to implement a fixed electricity rate over a period of 10 years that supposedly would result in savings for Meralco customers of P0.28 per kilowatt hour (kWh) or P9.46 billion for 10 years.

However, just three years into the 10-year power supply agreements (PSAs), SMC sought a temporary relief because of the unexpected increase in the price of coal early this year when Russia’s war against Ukraine erupted, exacerbated by supply restrictions from the Malampaya natural gas field.

As of this writing, SMC Global Power has yet to terminate its contract with Meralco despite the ERC’s decision.

Last week, SMC said that SMC Global Power continues to evaluate legal remedies to strengthen its claim for cost recovery or possibly reverse the unfavorable ERC ruling.

Termination, it said, remains a recourse for the company, as affirmed even by the ERC in its decision and as provided for in its PSAs with Meralco.

“With a termination of the agreements, the company can eventually dispatch the capacities originally covered by the PSAs, to supply either the Wholesale Electricity Spot Market (WESM); Meralco, for its emergency power requirements, or distribution utilities and electric cooperatives at prevailing market terms. These would allow it to recover in full its power generation costs,” SMC said.

Rubio said AboitizPower could step in and supply roughly 300 MW to Meralco.

“But we will not participate in a fixed rate that is not hedged,” he said.

The final price will depend on how much the company can secure cheaper coal supply.

Taking a long-term view, however, AboitizPower is preparing for the possibility that coal would eventually be phased out in 2045 to 2050.

By 2030, it expects its renewable energy portfolio to account for 50 percent of its capacity.

“That will be a total of 4,700 MW of total RE. We now have about 900 (MW). We will build and complete about 1,000 MW by 2023 to 2024. By 2025, we will be adding about 2,300 MW,” Rubio said.