Meralco fails anew to secure new supply deal

Manila Electric Co. (Meralco) has declared another failed bidding for a 260-megawatt (MW) interim power supply agreement (IPSA) after failing to attract interested companies.

“Unfortunately, by the time of the deadline for the submission of expressions of interest, we did not receive any interest from bidders,” Meralco head of utility economics Lawrence Fernandez told The STAR.

This prompted the bids and awards committee of Meralco to declare “another failed bid.”

Meralco first declared a failed bidding after no proposals were submitted on Feb. 26 despite the interest from 1590 Energy Corp. and San Roque Hydropower Inc.

Pursuant to the rules by the Energy Regulatory Commission (ERC) and the Department of Energy (DOE), they will resort to negotiating with suppliers for a power supply agreement.

However, Fernandez said, “there is enough” capacity for the Luzon grid.

“So what we’re trying to do with the 260 megawatts is to avoid our exposure to the spot market where prices can be volatile,” he said.

“If we can find a supplier to supply the 260 megawatts, then to that extent, we will be protected from volatility, from volatile prices in the spot market,” he added.

Fernandez said they would tap suppliers “as soon as possible” since it is for the summer season, which is “time-sensitive.”

He said the negotiation for a power supply agreement would still be subject under ERC’s review.

Should they not secure an agreement with a supplier, Fernandez said they would look into existing contracts and “maximize” it.

“We can still look at our other contracts if we can still maximize them, and then if they’re already maximized, then we can still go to the spot market,” Fernandez said.

This is to “minimize” the utilization of the spot market.

However, Fernandez said the spot market would still be an option.

Meralco earlier secured a 400-MW IPSA from San Miguel Corp.’s Limay Power Inc., which offered a total electricity rate of P6.2708 per kilowatt-hour, including value-added tax and line rental, for the entire requirement.

He said Limay Power is currently preparing to submit the power supply agreement to the ERC.

They are expecting the IPSA from Limay Power to take effect this summer, after ERC’s approval.