Meralco assures energy security with new PSAs

By: Riza T. Olchondra 12:04 AM May 10th, 2016
http://business.inquirer.net/210169/meralco-assures-energy-security-new-psashe

Manila Electric Co. Inc. (Meralco) said the seven Power Supply Agreements (PSAs) it recently signed with various power producers would ensure long-term energy security for its customers.

Meralco senior vice president Alfredo S. Panlilio said the contracts were executed based on the power retailer’s long-term load projections. The electricity sales in its service area was expected to grow by a compounded average growth rate of 3.6 percent to 3.7 percent annually.

“In keeping with Meralco’s mandate to source electricity in the least cost manner and to ensure reliability and affordability of supply for all our customers, especially in light of the expected continuous increase in demand and number of customers, coupled with the impending expiration of Meralco’s existing PSAs from 2019 to 2020, there was a pressing need for Meralco to source additional capacity through bilateral power supply contracts,” Panlilio said.

The firm contracted up to 3,551 megawatts (MW) of capacity and “associated energy” from new power plants. He assured customers the PSAs were executed after “extensive negotiations.”

The facilities signed up were anticipated to begin commercial operations sometime in 2020, except for Panay Energy Development Corp. (PEDC), which would start delivery of 28 MW by the September 2016 supply month, subject to approval of the Energy Regulatory Commission (ERC).

The contracted power capacity of 3,551 MW is about 81 percent of 4,384 MW, the total capacity of the power stations being developed by the supplier-firms.

The other suppliers are Redondo Peninsula Energy Inc., St. Raphael Power Generation Corp., MGen’s Atimonan One Energy Inc., Central Luzon Premiere Power Corp., Mariveles Power Generation Corp., and Global Luzon Energy Development Corp.

Meralco’s franchise area covers all of Metro Manila plus Bulacan, Cavite and Rizal, as well as parts of Batangas, Laguna, Quezon and Pampanga.

The PSAs shall become effective upon approval of the ERC.

Meralco spokesperson Joe Zaldarriaga said in a text message the proposed PSAs were submitted to the ERC last April 29, a day ahead of the deadline set by ERC for the start of mandatory bidding for PSAs. After April 30, distribution utilities such as Meralco would have to conduct tenders before signing PSAs with generation companies.

“Distribution utilities and the generation companies are enjoined to comply with the requirement on the conduct of a competitive selection process (CSP) before entering into a power supply agreement (PSA) to promote transparency in the procurement of power and elicit the best price offers which would mean a lower pass-on charge to electricity consumers,” ERC chairperson Jose Vicente B. Salazar said.