Regulator approves Meralco supply deal

Manila Times.net

REGULATORS have approved the power supply agreement between Manila Electric Co. (Meralco) and renewable energy developer Bacavalley Energy Inc.

In a decision, the Energy Regulatory Commission (ERC) said that it approved the two-year supply contract between the two companies, which would “redound to the benefit of Meralco’s customers and the national government.”

Under the agreement, Meralco will secure the output of Bacavalley’s 4.2-megawatt methane plant in San Pedro, Laguna.

The country’s largest power distributor will pay Bacavalley a contract price equivalent to state-owned National Power Corp.’s time of use rates, including government and wholesale electricity spot market charges.

The regulator said the project will have a “beneficial rate impact” to Meralco customers by means of lower rate due to savings from transmission charges because the methane plant is within the utility’s franchise area.

The project will also provide voltage support to Meralco’s distribution system thereby reducing its system loss. It will also address environmental concerns such as the local garbage problem, greenhouse gas emission and global warming.

The ERC said the project may also form Meralco’s compliance with the Renewable Portfolio Standards, as mandated in the Renewable Energy Act of 2008, wherein electricity suppliers are required to source a certain amount of their energy from renewable energy sources.

Bacavalley owns and operates the San Pedro Methane Plant powered by methane extracted from the San Pedro Landfill in Laguna.

The plant was commissioned September last year and is ready for commercial operations.

The project is modeled after the Montalban Methane Power Project, the first methane power plant in the country. Montalban Methane is an affiliate of Bacavalley.

Both Bacavaley and Montalban Methane are majority owned by businessman Salvador “Buddy” Zamora 2nd.

The San Pedro methane plant costs P798 million with an estimated economic life of 10 years. State-run Development Bank of the Philippines provided 70 percent of the funding while the balance was sourced from the capital of the company.

Meralco shares closed P225 apiece on Monday, down from P226 last Friday.

Euan Paulo C. Añonuevo