MANILA Electric Co. (Meralco) has secured a 300-megawatt (MW) emergency power supply deal with Aboitiz Power Corp. (AboitizPower) to partly replace the capacity that a unit of San Miguel Corp. (SMC) stopped supplying, but only for a short period.
In a statement on Thursday, Meralco said that the emergency power supply agreement (EPSA) is effective on Dec. 15 until Jan. 25 for a rate of P5.96 per kilowatt-hour (kWh). The power will be sourced from AboitizPower’s plant under GNPower Dinginin Ltd. Co.
Meralco said the emergency supply will mitigate the impact of higher rates as the power distributor has been sourcing from the Wholesale Electricity Spot Market (WESM) since Dec. 7.
“[The EPSA] will lessen Meralco’s exposure to WESM and in turn partly shield its customers from volatile and potentially higher generation costs,” Meralco said.
The Energy Regulatory Commission (ERC) earlier said that Meralco’s contract with a subsidiary of SMC Global Power Holdings Corp. was priced at only P4.2455 per kWh.
The unit, South Premiere Power Corp. (SPPC), terminated its power supply agreement (PSA) with Meralco on Dec. 7, prompting the latter to buy power from the spot market where the average price for November was placed by the ERC at P8.47 per kWh.
Meralco’s supply deal with SPPC covers 670 MW of capacity for 10 years.
SPPC stopped supplying power to Meralco after the ERC denied a petition jointly filed by the contracting parties for temporary relief through a rate increase. The regulator said the petition had no basis as their PSA is a fixed-rate contract.
The parties filed the petition as the SMC group claimed to have incurred losses amounting to P15 billion, of which it wanted to recover P5 billion through the rate increase. The losses, it said, were a result of extraordinary circumstances caused by commodity supply disruptions. It said the resulting surge in fuel costs was way beyond the price range and long-term outlook contemplated at the time of the PSA execution in 2019.
SPPC is the administrator of the natural gas-fired power plant in Ilijan, Batangas. SMC Global Power’s other unit San Miguel Energy Corp., the administrator of the coal power plant in Sual, Pangasinan, also sought a rate increase for a similar reason.
With the ERC’s rejection of the rate increase, SMC Global Power sought and secured a 60-day temporary restraining order (TRO) from the Court of Appeals, suspending the implementation of SPPC’s PSA with Meralco in November.
“We are hoping it will be resolved sooner because the TRO’s effectivity is 60 days, and it is a very long time. It covers at least two billing periods. We are expecting that the case will be resolved with a motion to lift the TRO filed by the OSG (Office of the Solicitor General),” ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta told reporters on Tuesday.
Meanwhile, Meralco vowed that it would “exhaust all measures to continue supplying its customers with sufficient and reliable power, while mitigating the impact of the TRO.”
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose
