January 19, 2018
MANILA ELECTRIC Co. (Meralco) and Solar Philippines Tarlac Corp. (SPTC) are seeking provisional authority to implement their power supply agreement (PSA) that will bring down the cost of solar energy to a record low P2.9999 per kilowatt-hour (kWh).
“Considering that SPTC’s solar power plant is expected to achieve commercial operations in the fourth quarter of 2017, an immediate implementation of the PSA would redound to the benefit of the consumers in terms of environmental benefits and would also contribute to the government initiative of encouraging the development of renewable energy in the country,” read the companies’ joint filing to secure provisional authority from the Energy Regulatory Commission (ERC).
They also said the P2.9999 per kWh offered by supplier Solar Philippines to Meralco is “significantly lower” than the prevailing feed-in-tariff (FiT) rates and the lowest tariff offer that the power distribution utility had received thus far for a solar technology.
The ERC has set the hearing on the application next month.
Meralco sought the power supply contract based on its power situation outlook for 2017 and succeeding years where it foresees a peaking capacity deficit in its portfolio because of an expected high demand as well as possible occurrences of scheduled maintenance shutdowns and forced outage of power plants.
Meralco’s distribution development plan from 2015 to 2024 forecasts a capacity requirement that will grow by a compounded average of 3.7%.
Meralco executed the PSA with SPTC on Oct. 6, 2017 for the purchase of electricity generated by the latter’s 150-MW solar farm in Concepcion, Tarlac. The contract called for 75 MW and up to 85 MW from the first to fifth year, then 85 MW from the sixth to 20th year.
The two companies forged the agreement after Meralco on June 28, 2017 invited price challengers to an offer made by another entity at a price bested by SPTC’s lower offer. The original power supplier did not exercise its right to match SPTC’s proposed price.
Based on the provisions of the companies’ power supply contract, if the ERC provisionally accepts the filing for the approval of the PSA by Oct. 20, 2017, then beginning Jan. 26, 2018, Meralco will be deemed to have sourced replacement energy from the wholesale electricity spot market at the cost offered by SPTC.
SPTC’s offered price is significantly lower than the price set by the regulator when the Department of Energy opened solar power for subscription initially at P9.68 per kWh, then at P8.69 per kWh when it expanded the target capacity to 500 MW. The FiT scheme, which guarantees payment of the fixed rate for 20 years, was fully subscribed long before the end-2017 deadline.
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 interest in BusinessWorld through the Philippine Star Group, which it controls. — Victor V. Saulon