July 3, 2018 | 12:06 am By Victor
V. Saulon, Sub-Editor
THE Energy Regulatory Commission
(ERC) has granted Manila Electric Co. (Meralco) and First NatGas Power Corp.
(FNPC) the authority to implement their power supply agreement (PSA) in an
“interim relief” that sets certain conditions.
“In the event that the final rate is
higher than that granted in the interim, the resulting additional charges shall
be collected by FNPC from MERALCO. On the other hand, if the final rate is
lower than that granted in the interim, the amount corresponding to the
reduction shall be refunded by FNPC to MERALCO,” the ERC said in its order.
In March, Lopez-led First Gen Corp.
said its unit had entered into a power supply contract with distribution
utility Meralco for the sale and purchase of around 414-megawatts (MW) of
baseload capacity.
With the PSA, First Gen said Meralco
had secured “competitively priced” baseload electricity, or steady 24/7 power,
since its plant’s all-in tariff at an 80% capacity factor is P3.77 per
kilowatt-hour.
The power will be sourced from
FNPC’s already constructed and currently operational San Gabriel combined cycle
natural gas-fired power plant within the First Gen Clean Energy Complex in
Batangas City.
The term of the PSA is six years
using gas from the Malampaya field, but, in the event that liquefied natural
gas (LNG) becomes available, the term of the PSA could be extended upon mutual
agreement with Meralco, First Gen said.
In their joint application in March,
Meralco and FNPC said the timely implementation of the PSA would best serve the
interest of electricity consumers.
They said the simulated delivered
price of P3.8637 per kWh provides for a lower cost of power compared to the
simulated effective cost at the wholesale electricity spot market (WESM) of
P4.4405 per kWh.
Compared with the simulated
effective cost at the spot market, the two companies said capacity and
corresponding net electrical output from the existing San Gabriel plant at the
contract price can reduce Meralco’s cost.
Any delay in the implementation of
the PSA would translate into foregone savings of about P0.0561 per kWh and
missed economic opportunities for Meralco’s captive customers, the two firms
said.
The ERC order came after Meralco
filed an urgent motion for issuance of provisional authority in April alleging
that the supply condition in the market is tight, “gravely affecting the
prices” at the WESM.
Meralco said it was projecting a
capacity deficit in its portfolio because of the expected high demand and the
possible occurrences of outages.
Based on its distribution
development plan, Meralco said its aggregate demand from 2018 to 2023 is
expected to grow by a compounded average rate of 4.13%.
Last May 29, Meralco and FNPC filed
a joint motion for issuance of provisional authority, which repeated the same
allegations in the distribution utility’s filing in April. FNPC’s natural
gas-fired power plant has been operating since January 2018.
In its order, the ERC said the
applicants have satisfied the substantial requirements for the grant of interim
relief. Based on its rules of practice and procedure, the agency may act on
applications with or without hearing based on allegations, supporting documents
and evidences presented by the applicants.
The PSA between Meralco and FNPC was
forged after the power utility invited price challengers in December 2017,
which resulted without any challenger submitting qualification documents. A
second round of invitation came out with no qualified price challenger,
prompting the award to FNPC.
No comments:
Post a Comment