Meralco’s revised power deal TOR out this week

By Lenie Lectura - March 10, 2020

https://businessmirror.com.ph/2020/03/10/meralcos-revised-power-deal-tor-out-this-week/

The Manila Electric Co. (Meralco) is likely to release this week the revised terms of reference (TOR) for the competitive bidding of a 1,200-megawatt (MW) power supply contract.

“I hope we can publish this week,” said Meralco President and CEO Ray Espinosa in an interview on Monday when asked for an update of the competitive selection process (CSP), which has been postponed in the past because the Department of Energy (DOE) strongly urged Meralco to relax the TOR in order to attract more participants.

Espinosa said the last issue to be ironed out, which concerns replacement power and outage allowance, was already cleared by the DOE.

“It’s ok with them. There is still outage allowance. They understand it,” said the Meralco official.

Meralco earlier raised to the DOE the concern of one of the bidders, GNPower.

“The concern raised by GNPower was about the obligation for replacement power. They are saying that the generator, prospective bidder, cannot afford to have zero outage allowance. They are asking for 30 days scheduled maintenance and 15 days forced outage allowance to be reflected in the TOR,” said Espinosa.

The DOE had wanted to impose zero outage to protect consumers from spike in electricity prices.

“We’re raising it to the DOE because they required it, they have their reasons but the bidders are saying, what about the investors, the power supplier. It was a commercial industry practice before it was changed by the DOE,” he said.

In the previous power supply agreements of Meralco, Espinosa said it is Meralco’s obligation to procure the replacement power and charge that replacement power to consumers within the 30-day and 15-day outage allowances. Beyond outage allowance, the power generator is responsible to procure that replacement power at its own risk, explained the Meralco official.

Espinosa said he is pleased with the outcome of the revised TOR. “That’s why it became important to work out a good terms of reference so we’re able to attract more bidders. I think we have a balance and good TOR already, subject to only one clarification, which relates to the replacement power, obligations related to outages. After that, we should be good to go.

We’re confident that with the way the TOR has developed, it will be looked at by potential bidders as good terms of reference and should attract a good number of qualified, serious bidders.”

Among the other revisions include the stacking of capacity of several power plants to meet Meralco’s 1,200-MW supply requirement and include merchant power plants to participate in the CSP.

It can be recalled that when Meralco first conducted the CSP for the 1,200-MW greenfield capacity only new power plants were allowed to participate.

Back then, the bids and wards committee declared a failed bidding after only Atimonan One Energy Inc., a unit of Meralco Powergen Corp., submitted its offer. After which, the DOE told Meralco that it must include old and new power plants.