THE Energy Regulatory Commission (ERC) has granted a five-month extension of the gas power supply contract between Manila Electric Co. (Meralco) and First Gen Corp., citing its role in supporting energy security, particularly with the summer months approaching.
In an eight-page order promulgated on Jan. 30, the ERC approved the joint motion filed by Meralco and First Gen unit First Gas Power Corp. (FGPC) to proceed sourcing power from the Sta. Rita gas-fired power plant in Batangas until June 25, 2026.
The approval of the second interim extension comes ahead of the Jan. 31 expiration of the previous temporary extension of the 25-year power purchase agreement.
The ERC said the renewed arrangement will likely be implemented under the identical terms and conditions as the sooner extension and can remain a pass-through charge to Meralco customers.
In approving the extension, the ERC reiterated that spot market prices could increase by around twofold if the Sta. Rita plant were to operate as a merchant plant, citing simulations conducted by the Independent Electricity Market Operator of the Philippines.
FGPC said it will likely be constrained to shut down the facility plant because of the lack of offtake. This might, in turn, compel the Malampaya gas field operations and the liquefied natural gas terminal to stop operations due to “technical interdependencies” among the many facilities.
“This case presents a critical energy security risk within the Luzon Grid with dire consequences extending beyond power rate increases to rotating power outages that might disrupt household, business, and industrial activities,” the ERC said.
The agency also noted the Sta. Rita plant’s contribution to energy security through the frequent operation of its available units at full capability, helping increase supply and stabilize spot prices.
“The Commission is cognizant that the reliable and versatile capability offered by the Sta. Rita Plant is far needed throughout the summer months,” the ERC said.
“It’s thus imperative that the facility grids maintain sufficient capability available to avert yellow/red alerts, power interruptions, or worse, widespread outage.”
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.
Hastings Holdings, Inc., a unit of PLDT Helpful Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera