THE Energy Regulatory Commission (ERC) has asked First Gen Corp. and Manila Electric Co. (Meralco) to justify their proposed extension of an influence purchase agreement (PPA) for supply from a Batangas gas-fired power plant.
In an order dated Aug. 22, the ERC directed the businesses to submit a proof on “whether the extension of contract is not going to end in an excess contracted capability in addition to a simulation on the impact thereof on the generation charge.”
The order was issued in response to the joint motion filed by First Gas Power Corp. (FGPC), a subsidiary of First Gen, and Meralco on Aug. 22 searching for approval of an interim PPA extension.
The businesses are also asking the regulator to permit the recovery from customers and Meralco’s payment to FGPC of “attendant costs during implementation of the interim extension.”
The ERC further directed FGPC and Meralco to clarify how they intend to utilize or dispatch their existing contracted plants.
Previously, FGPC submitted a letter to the ERC searching for a PPA extension to proceed supplying electricity to Meralco from the 1,100-megawatt (MW) Sta. Rita gas plant in Batangas for as much as 15 years.
The contract for the power is about to run out at the top of the month. The plant, which began full industrial operations on Aug. 17, 2000, has been supplying electricity to Meralco under a 25-year PPA.
First Gen President and Chief Operating Officer Francis Giles B. Puno said the corporate might need to contemplate ways to cut back operational costs, including “potentially temporary mothballing or shutting down the power for a protracted period,” if the contract will not be prolonged.
“Can the grid live without 1,100 MW of reliable, efficient gas-fired capability in the long run? My position is it cannot,” Mr. Puno said in an earlier interview.
First Gen owns and operates 4 gas-fired power plants with a combined capability of two,017 MW.
At present, its total capability across geothermal, wind, hydro, solar, and natural gas-fired plants stands at 3,668 MW. — Sheldeen Joy Talavera