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Meralco gets CSP exemption for power supply deal

MANILA Electric Co. (Meralco) has secured a certificate of exemption from the Department of Energy (DoE) from the competitive selection process (CSP) for the supply of 670 megawatts (MW) of power after a temporary restraining order (TRO) suspended its deal with a unit of SMC Global Power Holdings Corp.

“We have secured a certificate of exemption from the DoE. It was issued last week, but that is only for — since the TRO is only for — 670 MW. The certificate of exemption is only covering that,” Jose Ronald V. Valles, Meralco first vice-president and head of its regulatory management, told reporters on Monday.

The power distributor has been trying to secure emergency power supply agreements (EPSAs) after the Energy Regulatory Commission (ERC) rejected its joint petition with SMC Global Power, the power arm of San Miguel Corp. (SMC), for a rate increase, saying it had no basis as the agreement is a fixed-rate contract.

Meralco said in October that it filed for a certificate of exemption from CSP with the DoE.

In November, the Court of Appeals issued a TRO in favor of SMC Global Power. The TRO suspended the implementation of South Premiere Power Corp.’s (SPPC) power supply deal with Meralco that covers 670 MW of power supply.

Mr. Valles on Monday said Aboitiz Power Corp. (AboitizaPower) has an offer to supply Meralco an equivalent capacity of 300 MW until Jan. 25. The power will be sourced from GNPower Dinginin.

“What we have negotiated so far is with Aboitiz, their Dinginin, but only for 300 MW covering a period of two months, until Jan. 25. We are now looking for additional power supply,” he added.

He said the DoE approval includes AboitizPower and SMC’s Masinloc coal-fired plant and Limay fuel-fired plant, but SMC has “withdrawn all its offers” in exchange for Ilijan’s natural gas output. SMC Global Power earlier this month said it has offered the 1,200-MW capacity of its Ilijan plant to Meralco.

“We’re running the numbers right now. If we can do Ilijan that quickly, then that will be more beneficial than the AboitizPower’s offer. I’m looking for a capacity that will cover my exposure to WESM (Wholesale Electricity Spot Market) during summer months so that should be until July, so that is why we are interested in exploring San Miguel’s new offer,” Mr. Valles said.

He said they will talk to First Gen Corp. as Malampaya gas is fully allocated to the company’s plants.

“We cannot source from elsewhere except from the fuel coming from Malampaya if DoE and First Gen are willing to reallocate the Malampaya gas to Ilijan because Ilijan cannot run on liquid fuel,” he said.

SMC Global Power’s unit SPPC is the administrator of Ilijan. In June, SMC purchased the remaining banked gas of Philippine National Oil Co. (PNOC) at $1.2 billion for 70.26 petajoules.

However, the PNOC has yet to deliver the banked gas. SMC Global Power said the gas will support the fuel requirements of Ilijan power plant until February 2024. 

Mr. Valles said gas from Malampaya needs to be diverted for the use of Ilijan, which stopped sourcing from Malampaya after its gas supply agreement expired in June.

“First Gen needs to run on liquid fuel, but the liquid fuel has to be a pass-through cost. These are the mechanics, generally. But this needs to be agreed upon by the DoE then the ERC,” he said.

Mr. Valles said if SMC Global Power’s offer will not materialize, Meralco will be left with no choice but to source from WESM, which typically costs more.

“We are doing everything possible to ensure we will not have a shortage of supply during summer months and to mitigate the impact of the TRO, as well as the impact of any increases that will be brought about by the price offers of generators under EPSAs,” Mr. Valles said.

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. — AEOJ

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