Meralco may cut Luzon rates

Tuesday, 17 April, 2012 Written by Alena Mae S. Flores


Manila Electric Co. is seeking approval for new power supply agreements with four major coal energy producers that will reduce electricity rates in Luzon.


The country’s largest electricity distributor filed separate applications with the Energy Regulatory Commission for seven-year supply deals with Masinloc Power Partners Ltd., Therma Luzon Inc., South Premiere Power Corp. and Sem-Calaca Power Corp.


The new power supply agreements, if approved, will precede the impending implementation of open access and retail competition regime in the country.


Meralco justified the agreements, saying they will secure power supply during outages because of the provision for backup power. It asked ERC to approve the applications prior to the termination of the contract with state-owned National Power Corp. on Dec. 25, 2012 “in order to ensure continuous and reliable electricity for applicant’s customers.”


Masinloc Power, owned by AES Corp. of the US, operates the 600-megawatt Masinloc coal-fired power plant, while Therma Luzon Inc., a unit of Aboitiz Power Corp., manages the electricity output of the 735-MW Pagbilao coal-fired power plant.


South Premiere, a unit of San Miguel Corp., operates the 1,200-MW Ilijan power plant while Sem-Calaca, a subsidiary of DMCI Holdings Inc., runs the 600-MW Calaca coal-fired power plant.


Meralco will source 1,180 MW from South Premiere and 350 MW from Therma Luzon’s Pagbilao coal-fired power plant.


Meralco’s contract with Masinloc Power covers contracted capacity of 330 MW, which would increase to 430 MW by December 2015.


The distributor’s agreement with Sem-Calaca involves contracted capacity of 210 MW from Unit 2, which will be increased to 420 MW upon commercial operation of the plant’s Unit 1.


All four contracts carry a seven-year term, which can be extended for another three years upon mutual agreement of the parties.


Meralco asked ERC to approve the contracts, saying this will redound to the benefit of the consumers in terms of lower power rates.


It said under the contract with Masinloc Power, the resulting average price would be P4.6284 per kilowatt-hour, lower than the effective rate under the power distribution firm’s transition supply contract with National Power Corp. at P5.3909 per kWh in February.


Meralco said if the application charge for February had been approved, power rates should have been reduced by P0.0407 per kWh.


“Thus it is essential and urgent that the instant application be approved in order to immediately afford end-users the benefits resulting from implementation of the PSA,” Meralco said.


Meralco’s contract with South Premiere will result in an average rate of P4.6382 per kWh, compared to the Napocor transition supply contract rate of P5.3909 per kWh.


(Published in the Manila Standard Today newspaper on /2012/April/17)