Meralco subsidiary lone bidder in 2nd CSP

By Lenie Lectura - September 11, 2019

https://businessmirror.com.ph/2019/09/11/meralco-subsidiary-lone-bidder-in-2nd-csp/

A WHOLLY owned subsidiary of Meralco PowerGen Corp., the power-generation arm of the Manila Electric Co. (Meralco), emerged as the lone bidder for a 20-year power- supply contract for 1,200 megawatts (MW) of baseload capacity.

A total of four power firms earlier expressed interest to participate in the auction via competitive selection process (CSP).

Atimonan One Energy Inc., developer of the 1,200-MW ultra-supercritical coal-fired power plant, submitted its bid offer on Tuesday morning. Two interested bidders withdrew their offers, while another bidder did not submit its bid documents.

Panasia Energy Inc. submitted a letter last August 28 informing the Third Party Bids and Awards Committee (TPBAC) of its withdrawal of participation in the bidding process. Mariveles Power Generation Corp. also submitted a similar letter on Tuesday morning.

First Gen Corp./First Gen Ecopower Solutions failed to arrive and submit documents.

“Based on the foregoing, the TPBAC has determined that there was a failure of bidding and has resolved to report back to the distribution utility on this matter,” said the committee.

The opening of the bid documents was supposed to take place on September 10.

This is the second PSA bidded out by Meralco via CSP. Meralco has lined up a total of three CSPs:  A five-year contract for 500 MW, a 20-year contract for 1,200 MW greenfield, with commercial operations date (COD) in 2024, and a 10-year contract for 1,200 MW brownfield, with COD in December 2019.

Greenfield power plants are those that are built from scratch, while brownfield plants are already existing.

Savings in bills

Meanwhile, Meralco assured customers of P0.28 per kilowatt-hour (kWh) of savings in their electricity bills, or P9.46 billion annually for 10 years, from the 10-year PSA contract with 1,200 MW capacity that was bidded out via CSP last September 9.

TPBAC declared the bid offers submitted by Phinma Energy Corp., San Miguel Energy Corp. (SMEC), and South Premiere Power Corp. (SPPC)  to be the Best Bids.

Meralco said the resulting prices from the CSP are significantly lower than their average generation cost today of around P5.88 per kWh (VAT inclusive). As such, Meralco customers are assured of lower power rates for 10 years.

Phinma’s bid was for contract capacity of 200 MW with an all-in headline rate (VAT inclusive) of P4.7450/kWh and computed all-in LCOE (VAT inclusive) of P4.8849 /kWh.

SMEC’s bid was for 330 MW at all-in headline rate (VAT inclusive) of P4.6314/kWh and computed all-in LCOE (VAT Inclusive) of P4.9299/kWh. SPPC’s bid was for 670 MW and had an all-in headline rate (VAT Inclusive) of P4.6314/kWh and computed all-in LCOE (VAT inclusive) of P4.9300/kWh. These bids, which collectively totaled 1,200 MW in contract capacity, are much lower than the all-in headline rate (VAT-inclusive) of P4.9196/kWh and computed all-in LCOE (VAT-inclusive) P5.3694/kWh reserve prices predetermined by Meralco based on recently ERC-approved contracts and disclosed only upon opening of bids.

The Best Bids will now undergo post-qualification. The TPBAC is expected to issue the respective Notices of Award on September 10, to be followed by the signing of the PSAs with Meralco within the week.  This particular PSA will take effect on December 26, 2019.

Meralco declared that the successful CSP would ultimately result in least cost to consumers. Meralco clarified that the all-in rate already includes line rental and VAT, and the cost of replacement power for all plant outages. The generator companies will also be liable to pay a fine if they are unable to deliver power; the fine will be used to reduce the generation cost to the consumers.  The three firms bested offers from SMC Consolidated Power Corp. (SCPC) and Masinloc Power Partners  Co. Ltd., which are both SMC-affiliated.

Meralco utility economics head Lawrence Fernandez said the CSP was for only 1,200MW as against the 1,630MW offered capacity of the bidders that attended. “So, not all offers could be accepted. The three bidders with the best bids submitted the lowest cost offers,” he explained.

The bidding was witnessed by rep-resentatives from the Department of Energy (DOE) and was attended by several generation companies. According the Phinma Energy President Eric Francia, “I just want to express our appreciation to the TPBAC and TWG for a well run process.  It was a good experience and hopefully we will have more pro-consumer bids moving forward.”

The Meralco TPBAC is chaired by Atty. Ferdinand Domingo, who was selected as representative of consumers, together with Atty, Adrian Cristobal, another consumer rep-resentative and a former undersecretary of the Department of Trade and Industry. The process for the selection of the consumer representatives was approved by the DOE.