Business World Online
Posted on April 10, 2014 10:36:27 PM
MANILA Electric Co. (Meralco) has entered into another three-month supply deal with a power generator to meet higher customer requirements this summer.
In a petition dated April 8, Meralco asked for the Energy Regulatory Commission’s (ERC) approval to implement an interim power supply agreement (IPSA) with Panasia Energy, Inc.
Panasia owns and operates a 540-megawatt (MW) diesel power plant located in the municipality of Limay in Bataan province.
Meralco said its IPSA provides that it will purchase up to 270 MW from the Limay plant for P13.26 per kilowatt-hour (/kWh).
Meralco cited the National Grid Corporation of the Philippines’ forecast showing that Luzon grid’s reserve capacity from April to June will be below the required contingency reserve due to scheduled maintenance shutdowns and forced outage of major base load power plants.
The utility acknowledged “the need to source the corresponding deficiency from interim bilateral supply agreements with power suppliers with available uncontracted capacity to mitigate exposure to the Wholesale Electricity Spot Market (WESM).”
Meralco said the IPSA with Panasia will be effective upon issuance of final approval by the ERC and will expire on June 30.
It added that the simulated delivery price under the IPSA with Panasia should result in cost savings in the blended generation rate for the months of April, May and June.
“This translates into an overall savings of P0.2699/kWh from the period April to June 2014,” Meralco said.
“However, if the IPSA between Meralco and Panasia is not implemented during said period when the reserve capacity will be below the required contingency reserves, Meralco will be constrained to source from the WESM.”
Based on its simulation, prices at WESM may reach P25.0194/kWh, P22.1644/kWh and P26.1507/kWh during the same three months, respectively.
“It is to be noted that these costs can increase further, considering high volatility of WESM prices and such very tight supply under thin reserve margin conditions,” Meralco said. “Thus, it is essential and urgent that the application be approved in order to shield end-users from the volatility of WESM prices for the period...”
Earlier this month, Meralco had also filed separate applications with the ERC for two IPSAs to augment the power needs of its customers.
The first IPSA was a deal with two subsidiaries of Global Business Power Corp.: Toledo Power Co. (TPC) and Panay Power Corp. (PPC); while the second one was with 1590 Energy Corp., a unit of listed Vivant Corp. The IPSA with TPC involves supply of up to 28 MW and option for additional 9 MW; while that with PPC provides for the supply of 27 MW.
TPC owns two power facilities in Cebu: the 60-MW Sangi power station that runs on coal, and the 40-MW Carmen power station fueled by diesel.
On the other hand, PPC owns and operates a 72-MW diesel plant in La Paz, Iloilo City.
Both deals were intended to be effective from April 1 to June 30.
Meanwhile, the agreement with 1590 Energy involves the purchase of up to 140-MW capacity from the 225-MW Bauang diesel power plant in La Union -- which will be effective upon final approval of the ERC until June 30.
“The IPSAs were entered into to address the increase in demand and mitigate the company’s exposure to the Wholesale Electricity Spot Market during the summer months,” Meralco had said.
Last month, the Energy department warned of tight power supply this summer which could affect electricity prices.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by Philippine Long Distance Telephone Co. (PLDT). Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld. -- Claire-Ann Marie C. Feliciano source
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