By Myrna M. Velasco
Power utility giant Manila Electric Company (Meralco) has cornered three “best bids” in its auctioned supply portfolio that will satiate its five-year requirement of 500 megawatt (MW) peaking capacity.
Meralco accepted the best bids of First Gen Hydro Power Corporation of the Lopez group; PHINMA Energy Corporation of the Ayala group; and South Premiere Power Corporation of the San Miguel Energy group during the competitive selection process (CSP) undertaken by a third party bids and awards committee (TPBAC) on September 11.
For First Gen, its headline rate offer for 100MW capacity is at P5.1908 per kilowatt-hour (kWh) and its all-inclusive levelized cost of energy (LCOE) is at P5.3989 per kWh. All rate offers are inclusive of value added taxes.
For PHINMA Energy, the headline rate and LCOE are both at P5.5858 per kWh for 110MW capacity; while for South Premiere Power, the headline rate is P5.5347 per kWh and the VAT-inclusive LCOE is at P5.7527 per kWh for 290MW capacity.
Similar to the CSP outcome of the baseload capacity, the “best bids” in the peaking supply deals will also go through post-qualification process prior to the issuance of notice of award and the signing of the requisite power supply agreements (PSAs) that shall then be filed with the Energy Regulatory Commission (ERC) for approval.
“The third party bids and awards committee shall issue respective notices of award in favor of those who satisfactorily passed post-qualification,” the auction team chaired by lawyer Ferdinand A. Domingo has stipulated.
On these peaking capacity procurements, Meralco indicated that estimated savings to its customers could hover at P4.4 billion over the five-year stretch of the power supply contracts.
“This is equivalent to a rate reduction of around P0.13 per kWh for consumers, starting December 26, 2019,” the power utility firm has emphasized.
In tandem with the earlier 1,200MW capacity supply sourcing for its 10-year baseload capacity, Meralco qualified that total cost savings to consumers will be P13.86 billion on a yearly basis, which will redound to a rate reduction of P0.41 per kWh. Domingo stressed that “from a consumer perspective, I am confident that these new contracts will ultimately lead to the much-needed additional power supply to address our growing demand in the country.”
And with the lower rates cornered in the CSP exercise, the TPBAC chairman asserted that “we achieved our objective to increase supply at lower costs.”
The cornered contracts will be part of Meralco’s short- to medium-term supply portfolio for its captive customers – primarily its 6.7 million residential subscribers who cannot exercise yet the “power of choice” under the retail competition and open access (RCOA) in the deregulated electricity sector.
The only other matter that Meralco and its TPBAC will need to sort out will be the CSP on its solicitation of a 20-year supply contract for a capacity of 1,200MW that will come from a new-build plant with delivery starting year 2024.