By Lenie Lectura - May 31, 2017
THE Manila Electric Co. (Meralco) underscored the urgency for the regulators to act on its applications for approval of the utility firm’s power-supply agreements (PSAs), saying delays will likely affect consumer benefits and have an impact on project cost if these are not approved soon.
“We will see the cost impact overtime. The cost impact will mainly be on escalations on the EPC [engineering, procurement, construction] cost tucked on to the price of the EPC. Definitely, there is cost impact to the project, cost impact to Meralco,” Meralco President Oscar Reyes said.
Meralco filed several PSA applications with the Energy Regulatory Commission (ERC) cover a total of 3,551 megawatts (MW) with seven generation companies in April last year.
Meralco’s PSAs with Redondo Peninsula Energy Inc. (RP Energy) covers the supply of 225 MW for its base-load requirements. Meralco also plans to purchase up to 400 MW from Saint Raphael Power Generation Corp. (SRPGC).
It also sealed a deal to purchase the full output of Atimonan One Energy Inc., a 2×600-MW supercritical coal-fired power plant being developed by Meralco General The country’s largest distribution utility also inked power agreements with subsidiaries of Global Business Power Corp. (GBPC), Panay Energy Development Corp. (PEDC) and Global Luzon Energy Development Corp. (GLEDC).
Under the deals, Meralco will purchase up to 70 MW from PEDC and up to 600 MW from GLEDC.
Last, Meralco forged deals with two San Miguel power plants—Central Luzon Premiere Power Corp. (CLPPC) and Mariveles Power Generation Corp. (MPGC)—for the purchase of up to 528 MW of capacity.
Reyes said the PSAs, if implemented, will redound to consumer savings in their electricity bills. For instance, the rate impact of its PSA with RP Energy is projected to be less P0.1327 per kilowatt-hour (kWh); P0.7799 per kWh for its PSA with Atimonan; P0.2589 per kWh with SRPGC; P0.4678 per kWh with CLPPC; P0.3464 per kWh with MPGC; P0.0188 per kWh with PEDC; and P0.5308 per kWh with GLEDC.
Reyes pointed out the difficulty in putting up a power project. “We have invested substantially already and some negotiations have been as early as 2011 and 2012. So, these are fully negotiated PSAs. And time is money, every month of delay means higher EPC costs, higher financing costs, higher exchange rates so it is very detrimental to consumers.”
Meralco legal head William Pamintuan said the delays would also affect the timeline for the projects’ financial closing.
“We can’t do financial closing unless these PSAs are approve by the ERC. The banks involved in these projects would require regulatory approvals. Thus, if there’s still no ERC approval yet then there’s no financial closing,” Pamintuan said earlier.