By Danessa Rivera (The
Philippine Star) | Updated June 1, 2017 - 12:00am
MANILA, Philippines - Further delays
in the approval of long-term power supply deals of power distribution giant
Manila Electric Co. (Meralco) could translate to higher electricity costs and a
tight supply situation in the long run, its top official said.
It has been over a year since
Meralco applied for the approval of its power supply agreements (PSAs) with
seven generation companies for over 3,500 megawatts (MW) of supply for 25
years, but only one has been given provisional authority by the Energy
Regulatory Commission (ERC).
Meralco president Oscar Reyes said
the agreements would meet the requirements of their franchise area and the rest
of the Luzon grid with adequate reliable power on a stable basis and pricing.
“These power plants are really
needed especially if the Philippines continues to grow at its current
trajectory and through these planned investments, infrastructure promotes
growth in demand,” he said.
“I would say that it is possible
that demand growth may exceed expectations in which case power supply tightness
will be a very major issue and the question is who will answer for that,” the
Meralco official said.
The PSAs involve a supply of 3,551
MW, which corner 81 percent of the combined output of the seven power plants,
most of which are owned or partly owned by Meralco through its power generating
unit Meralco PowerGen Corp. (MGen).
The Meralco PSAs include a 225-MW
supply with Redondo Peninsula Energy Inc. (RP Energy) – a consortium composed
of Meralco PowerGen Corp. (MGen), Aboitiz Power Corp. and Taiwan Cogeneration
International Corp.; a 400-MW supply with St. Raphael Power Generation Corp. –
a new joint venture between MGen and Semirara Mining and Power Corp.; 600-MW
supply with Atimonan One Energy Inc., which is fully owned by MGen.
The power distributor will also
source up to 528 MW capacity from Central Luzon Premiere Power Corp. and
Mariveles Power Generation Corp., up to 70 MW from Panay Energy Development
Corp. and up to 600 MW from Global Luzon Energy Development Corp.
The deals were dragged into the ERC
corruption controversy after director Francisco Jose Villa Jr. committed
suicide in November 2016.
Meralco was alleged to have entered
midnight deals with the ERC after it was tagged in anomalous dealings which were
revealed following the suicide of the agency’s bids and awards committee chief.
The applications were submitted to
the ERC on April 29, 2016, just before the new effectivity date of the
competitive selection process (CSP) policy requiring distribution utilities to
undertake competitive bidding to secure PSAs with generation companies.
However, Reyes said “these PSAs are
fully negotiated power supply agreements and they were allowed to be submitted
without going into CSP with a restatement.”
“And time is money, every month of
delay means higher EPC costs, higher financing costs, higher exchange rates so
it is very, very detrimental to consumers,” he said.
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