Bidding underway to assure power supply for next years

Published September 14, 2019, 12:46 AM

https://news.mb.com.ph/2019/09/14/bidding-underway-to-assure-power-supply-for-next-years/

The  Manila Electric Company  (Meralco)   accepted last Thursday three “best bids” to meet its five-year requirement  for a 500-megawatt peaking capacity – the bids of First Gen Hydropower Corp. of the Lopez  Group, the Phinma  Energy Corp. of the Ayala Group, and the South Premier Power Corp. of the San  Miguel Energy Group. The bids will now go through a post-qualification  process,  then  the signing of agreements  that will be filed with the Energy Regulatory Commission for approval.

With these peaking-capacity procurements,  Meralco  said  estimated savings for its consumes  will be  around  P4.4 billion over  the five-year period of the contracts, equivalent to a rate reduction  of around  P0,13  per kilowatt-hour  for consumers starting December 26, 2019. In tandem with an earlier 1,200-MW  sourcing,  the total cost savings to consumers will be P13.86 billion  a  year, redounding  to a  rate reduction of P0.42 per kilowatt-hour.

Meralco  has been undertaking  a competitive selection process  through public bidding  for power supply in the coming years.  A bidding last week for 1,200 megawatts was  declared  a “failure  of bidding” when two of its targeted bidders withdrew  and another interested party did not appear. But Thursday’s bidding proceeded without a hitch.

There had been an attempt by  Bayan  Muna  to stop  the bidding  set by Meralco,  claiming manipulation  to  favor Meralco-owned companies,   but the Supreme  Court declined to issue any Temporary  Restraining   Order (TRO). The many bidding  processes  scheduled  by Meralco are  thus proceeding  as scheduled.

Meralco  assured that  its bidding process  strictly follows legal procedures set by the Third Party Bids and Awards Committee.  Contrary  to fears  that  the  bidding could result in higher electricity rates for consumers,  Meralco said,  the contracts provide that  the generating firms assume  responsibility for plant outages. They are liable to pay a fine if they are unable to deliver power.

With the country’s increasing industrialization,  the  need for power will be rising in the coming months and years,  along with an increase in urban  households  in  the country. Secretary Alfonso  Cusi  of the Department  of Energy  said  that the country will be needing more power  for “Build, Build, Build” and Gross  Domestic Power (GDP)  growth under the Philippine Energy Plan (2017 to 2040).

Constructing new power plants is an  urgent  measure  to solve the country’s  energy security requirements. “We don’t  want to again experience  the serious power shortage in the eighties that  badly crippled our economy,” Meralco  said.  “There is need to trust an open and transparent  bidding  process,  rather than propagate ill will without factual basis. Otherwise,  we will not be able to build  the generating capacity we need in the short time we have before a full-blown power shortage.”