By
Lenie Lectura - June 22, 2017
THE Manila Electric Co.
(Meralco) has formally asked the Energy Regulatory Commission (ERC) to
resolve—at the soonest possible time—three of its seven applications
for power supply agreements (PSAs).
Meralco filed several
PSA applications with the ERC covering a total of 3,551 megawatts (MW) with
seven generation companies in April last year.
Meralco’s PSAs with
Redondo Peninsula Energy Inc. (RP Energy) covers the supply of 225 MW for its
base-load requirements.
Meralco also plans to
purchase up to 400 MW from St. Raphael Power Generation Corp. (SRPGC).
It also sealed a deal
to purchase the full output of Atimonan One Energy Inc., a 2×600-MW
supercritical coal-fired power plant being developed by MGen.
The country’s largest
DU also inked power agreements with the subsidiaries of Global Business Power
Corp. (GBPC), Panay Energy Development Corp. (PEDC) and Global Luzon Energy
Development Corp. (GLEDC). Under the deals, Meralco will purchase up to 70 MW from
PEDC and up to 600 MW from GLEDC.
Last, Meralco forged
deals with two San Miguel power plants—Central Luzon Premiere Power Corp.
(CLPPC) and Mariveles Power Generation Corp. (MPGC)—for the purchase of up to
528 MW of capacity.
ERC records show
Meralco and Atimonan One filed last month a joint urgent motion to resolve,
praying for the expeditious resolution of their application.
The same application
was filed by Meralco and RP Energy last month.
To date, the
applications have yet to be resolved.
“In order to facilitate
the completion of the A1E plant as scheduled and to ensure the timely
commencement of financial close and commercial operations thereof,
A1E respectfully reiterates its prayer for the urgent resolution of
the instant application,” Meralco and Atimonan One stated.
“Delay in the approval
of the instant application and the consequent delay in the financial close and
subsequently, commercial operations date of A1E will adversely affect Meralco’s
ability to meet demand growth in its franchise and overall energy security in
the Philippines,” they said.
In another application,
Meralco and RP Energy said the resolution will undoubtedly redound to the
benefit of consumers requiring reliable and cost-effective supply of electric
power.
A similar application
was also filed by Meralco and SRPGC.
Meralco President Oscar
Reyes earlier underscored the urgency for the regulators to act on its
applications, saying delays will likely affect consumer benefits and will have
an impact on project cost if these are not approved soon.
“We will see the cost
impact over time. The cost impact will mainly be on escalations on the EPC
[engineering, procurement, construction] cost tucked on to the price of EPC.
Definitely, there is cost impact to the project, cost impact to Meralco,” Reyes
said.
Reyes added the PSAs,
if implemented, will redound to consumer savings in their electricity bills.
For instance, the rate impact of its PSA with RP Energy is projected to be less
P0.1327 per kilowatt-hour (kWh), P0.7799 per kWh for its PSA with Atimonan,
P0.2589 per kWh with SRPGC, P0.4678 per kW with CLPPC, P0.3464 per kWh with
MPGC, P0.0188 per kWh with PEDC and P0.5308 per kWh with GLEDC.
Reyes stressed the
difficulty in putting up a power project. “We have invested substantially already
and some negotiations have been as early as 2011 and 2012. So, these are fully
negotiated PSAs. And time is money. Every month of delay means higher EPC
costs, higher financing costs, higher exchange rates, so it is very detrimental
to consumers.”
Meanwhile, S&P
Global Ratings raised its long-term corporate credit rating on Meralco on the
back of a rosy outlook of the utility firm’s financial standing.
The New York-based debt
watcher said Meralco’s credit rating was raised from “BB+” to “BBB-” and the
Asean regional scale rating on the power distributor to “axA-” from “axBBB+”.
The stable outlook
reflects S&P’s “anticipation that Meralco will grow moderately, maintain
stale margins, and smoothly execute its capital expenditures and investments.”
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