Meralco PSA bidder seeks clarification on CSP terms of reference

Published February 29, 2020, 10:00 PM By MYRNA M. VELASCO

https://business.mb.com.ph/2020/02/29/meralco-psa-bidder-seeks-clarification-on-csp-terms-of-reference/

GNPower Ltd. Co., which is a joint venture of the Aboitiz and Ayala groups, has formally asked clarifications on the terms of reference (TOR) of the Manila Electric Company’s (Meralco) competitive selection process (CSP) – primarily the terms relating to “outage allowance” that shall be prescribed under the power supply agreement (PSA) of the new plant capacity that shall be placed on tender.

Atty. Jose Ronald V. Valles, first vice president and regulatory head of Meralco, said “we intend to file a letter to the DOE (Department of Energy) in response to the query made by a prospective bidder with respect to replacement energy,” or the outage allowance that will be accorded to the power plant that will be supplying to the utility firm.

That particular query, he stressed, must first be addressed through a DOE clarification before the utility firm can move forward on the publication of its invitation to bid (ITB) for its targeted CSP for a 1,200-megawatt capacity that will become part of its supply portfolio starting year 2024.

It was the energy department that had just given its approval recently on the second revision on the terms of reference (TOR) for the utility firm’s scheduled CSP this year.

Valles indicated “the concern raised by GNPower was about the obligation for replacement power,” with him emphasizing that the prospective bidder raises concern that it “cannot afford to have zero outage allowance.”

The Meralco executive emphasized the plea is “for 30 days scheduled maintenance and 15 days forced outage allowance to be reflected in the TOR.”

Valles explained that under the existing power supply deals of Meralco, these are “within the outage allowance,” and that the distribution utility “will have the obligation to procure the replacement power and charge the replacement power to consumers.”

However, beyond the allowed duration of outages prescribed under the contract, “the generator will have to procure that replacement power at (its) own risk.”
Meralco President Ray C. Espinosa said “the way the TOR is structured, the plant that will be awarded or the winning bid will have to be a new plant because the requirement is that a plant must not have achieved COD (commercial operation date) by 2020.”

On the scheduled CSP, Valles added that their third party bids and awards committee (TPBAC) is still going over the revised TOR “and we wait for their advise as to when will this be published.”

This is already the second bidding for the utility firm’s solicitation of a new capacity that will form part of its 2024 supply complement – the first one was in September last year.

The company also concluded last year the successful auctions on its PSAs for brownfield capacities for baseload and mid-merit requirements – and the contracted plants have already started delivering power to it last December following the approval of the contracts by the Energy Regulatory Commission.