ERC OKs limited use of LNG for Meralco, FGEN

The Energy Regulatory Commission has allowed First Gas Power Corp. (FGPC) and FPG Corp. to use liquefied natural gas as an alternative fuel supply source for the Sta. Rita and San Lorenzo gas plants “in the case of the occurrence of a fuel supply force majeure event.”

This was ruled after Manila Electric Co. (Meralco) sought ERC’s approval to pass on to consumers the recovery and payment of LNG costs.

The ERC said subject power purchase agreements (PPAs) allow for the supply from other sources of gas in cases of a “fuel supply force majeure event.”

According to the ERC, the shortage of the Malampaya natural gas “qualified under the terms defined” in the PPAs as a fuel supply force majeure event.

“Hence, the commission resolved that LNG may be used by the subsidiaries of First Gen Corp. (FGEN) as an alternative fuel source to run the said plants, but only in case of shortage or unavailability of natural gas supply in the Malampaya field,” ERC said.

ERC added that Meralco claimed that FGPC and FGP are allowed to use other sources of gas other than from the Malampaya field, provided that the same is under competitive price and supply terms.

“The commission will continue to impress upon distribution utilities their obligation to diligently comply with their least cost obligation, particularly in passing on fuel costs to consumers,” ERC chairperson and CEO Monalisa Dimalanta said.

“We have consistently ruled that if recovery of certain costs have no basis under the PPAs or power purchase agreements, these cannot be passed on to endusers,” Dimalanta added.

Meanwhile, Meralco said it would “strictly abide by the rules and regulations governing” its franchise.

“This directive will help Meralco ensure affordable, reliable and continuous electricity supply within our franchise area, especially during the dry season when demand surges,” Meralco vice president and head of corporate communications Joe Zaldarriaga said.