Meralco to enter into negotiated deal for 260MW

THE Manila Electric Co. (Meralco) will enter into a negotiated procurement for 260 megawatts (MW) of peaking capacity after the Bids and Awards Committee for Power Supply Agreements (BAC-PSA) declared another failed competitive auction.

In a notice, Meralco said its BACPSA did not receive any expression of interest and no one purchased the bidding documents during the second round of competitive selection process (CSP) conducted last March 8.

“The bidding is considered to have failed,” the utility firm said.

Under the DOE’S revised CSP policy and the Energy Regulatory Commission’s (ERC) guidelines, the company may now opt to enter into a negotiated PSA, which would still need to be submitted to the ERC for approval.

The 260-MW peaking requirement was supposed to augment Meralco’s power supply requirements for the dry season beginning March until July this year in preparation for an expected increase in demand.

“We need that for the (dry season), at least until July, because those are the months with the highest consumption here in the Meralco area.

So, consumption is lowest during the first quarter, and is at its highest starting second quarter up to June or July. So, that’s what we want to cover with the additional contracts,” said Meralco BAC-PSA Chairman and utility economics head Lawrence Fernandez.

“If there is no 260MW today, then we will have to resort to using up more of the other contracts. If those contracts are fully used up then we’ll have to get from the WESM [Wholesale Electricity Spot Market].”

Meralco Spokesperson Joe Zaldarriaga noted the importance of Interim Power Supply Agreements (IPSA), such as the 260-MW peaking requirement, for the utility firm.

“That’s why we need IPSA. This is to ensure we have supply when the peak months arrive and so that we are not exposed to the spot market.

Because we know, historically, in the (dry season) months, the price in the market really increases. Reason, more electricity is needed. So, if we will not cover our requirements through an interim power supply agreement, there might be a problem because we will be exposed to the market,” said Zaldarriaga.

During the first failed CSP round, there were originally two interested bidders, but they eventually withdrew their interest in the auction.

1590 Energy Corp. cited the “excessive and unreasonable bid security required” as its reason for such withdrawal while San Roque Hydropower Inc. informed Meralco that it needed to further evaluate the terms of reference.

However, no proposals were turned over during the first deadline last February 26.