Meralco, Aboitiz unit ink power supply deal

By Neil Jerome C. Morales (The Philippine Star) Updated February 29, 2012 12:00 AM


MANILA, Philippines - Manila Electric Co. (Meralco), the country’s largest power distributor, has signed a new deal to source power from a subsidiary of Aboitiz Power Corp. (APC).


The Pangilinan-led utility firm said it also is in talks for a power supply agreement (PSA) with diversified conglomerate San Miguel Corp. to ensure continued supply of power to its customers.


Meralco said its board of directors approved the signing of a PSA with Therma Luzon Inc.


“The PSE between Meralco and Therma Luzon for the 350-megawatt (MW) capacity for the Pagbilao power plant is scheduled to be signed not later than Feb. 29,” the company said.


Under the agreement, Meralco will buy power from Therma Luzon for seven years.


APC said the PSA will be implemented after an approval by the Energy Regulatory Commission (ERC).


“Pending the ERC’s approval, the transition supply contract (TSC) between Meralco and National Power Corp. will govern the supply of power by Therma Luzon to Meralco,” the company said. The TSC will expire in December.


Therma Luzon is wholly-owned by APC. It operates the Pagbilao power plant, a 764-MW coal-fired thermal power plant in Pagbilao, Quezon.


Meralco will also sign one more PSA with a power generation firm to ensure the ample amount of electricity it can distribute to consumers.


“I think we will try to close one more contract...We are talking to San Miguel for Sual,” Meralco chief operating officer Oscar S. Reyes said. The capacity is still under discussion.


Meralco is indirectly controlled by Hong Kong-based First Pacific Co. Ltd. and partly owned by San Miguel Corp.


“We will have a supply envelope that will enable us to provide assurance on adequacy, reliability and quality,” Reyes said. “That is good for high growth customers.”


The company had 5.3 million customers last year, up by 3.7 percent from a year ago.


Ample power will allow Meralco to manage power distribution despite outages of supply from power generators, Reyes said.


Late last year, Meralco entered into PSAs with South Premiere Power Corp., which administers the Ilijan power plant in Batangas; SEM-Calaca Power Corp., a wholly owned subsidiary of Semirara Mining Corp. that owns and operates the Calaca coal-fired thermal power plant; and Masinloc Power Partners Co. Ltd. (AES Philippines), which owns and operates a coal-fired power generating facility in Masinloc, Zambales.


Profits of the power utility giant surged almost 40 percent to an all-time high P13.2 billion on the back of higher rates and more sales from a record number of consumers.


Core net income, which strips out currency and derivatives-related items, climbed 22 percent to P14.9 billion from a year ago. It exceeded the profit guidance of P14.5 billion. Meralco expects core earnings to hit P15 billion this year.