Meralco, Aboitiz unit secure approval for 100 megawatt supply deal

MANILA, Philippines — Pangilinan-led Manila Electric Co. (Meralco) and Aboitiz-backed GNPower Dinginin Ltd. Co. (GNPD) have secured regulatory approval for their 100-megawatt (MW) power supply deal.

The Energy Regulatory Commission (ERC) has granted interim relief to the companies, effectively allowing them to proceed with their 15-year power supply agreement (PSA) starting Aug. 26.

“The commission finds merit and necessity to allow the parties to implement their PSA pending the issuance of the final decision in this case,” the ERC stated in an order dated Aug. 22.

For this PSA, the regulator authorized an applicable capacity rate of P17,228.88 per kilowatt-year. This is equivalent to around P1.9668 per kW-hour, excluding other charges such as fuel costs.

In granting interim relief to Meralco and GNPD, the ERC considered several factors, including compliance with the competitive selection process (CSP), the supply-demand scenario, the bid price and the PSA rate.

According to the commission, the proposed rates in the subject PSA were in fact lower than those of other Meralco suppliers utilizing coal and natural gas as fuel.

In September last year, Meralco and GNPD filed a joint application seeking ERC approval for the resulting PSA of a 600-MW baseload CSP, in which the latter was awarded 100 MW.

GNPD, which owns and operates a 1,336-MW coal-fired power plant in Bataan, won the supply deal after submitting an offer of P5.7392 per kWh.

In their application, the parties noted that the PSA could result in around P1.81 billion in cost savings to Meralco customers, compared to sourcing the same capacity from the spot market.

As a highly regulated entity, Meralco is required to conduct competitive bidding for its power supply procurement, in accordance with the rules set by the ERC and the Department of Energy.