MANILA ELECTRIC CO. (Meralco) and Sual Power, Inc. (SPI) have asked the Energy Regulatory Commission (ERC) to approve a four-year power supply agreement expected to generate about P631 million in consumer savings.
In a joint filing dated May 6, the businesses sought approval for the procurement of 200 megawatts (MW) of baseload capability under a deal resulting from Meralco’s competitive bidding for supply.
SPI, a unit of San Miguel Global Power Holdings Corp., emerged as the bottom bidder amongst six generation firms. It operates the 1,200-MW coal-fired plant in Pangasinan.
The contract is meant to assist Meralco comply with the Renewable Portfolio Standards, which require utilities to acquire a part of their supply from eligible renewable energy (RE) sources.
Under the deal, SPI may source electricity through the Wholesale Electricity Spot Market (WESM) or through the Renewable Energy Market, where renewable energy certificates are traded. These certificates represent electricity generated from renewable sources.
SPI offered to provide the capability at P4.1955 per kilowatt-hour (kWh) until Jan. 25, 2030.
That is about P0.3605 per kWh lower than the estimated P4.650 per kWh cost if the identical requirement were obtained through WESM purchases or RE certificate procurement, the businesses said.
“Actually, by sourcing the capability and the renewable energy certificate through the Meralco-SPI power supply agreement, Meralco’s average blended generation rate might be reduced by about P0.0153 per kWh… leading to savings to consumers of about P631 million,” in response to the filing.
The agreement was originally set to take effect on Jan. 26 but was delayed as a consequence of the late issuance of a certificate of conformity by the Department of Energy, which is required to proceed with the bidding process.
Meralco and SPI said the delay exposes consumers to potential volatility in WESM prices and better costs for renewable energy certificates if interim approval will not be granted.
Meralco is the country’s biggest private distribution utility, serving greater than 8.1 million customers across Metro Manila and nearby provinces including Bulacan, Cavite, Rizal, Laguna, Batangas, Pampanga and Quezon.
Its controlling shareholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of MediaQuest Holdings under the PLDT Useful Trust Fund, has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera