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
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