Meralco bidding to cut down generation charges

Phinma Energy Corp., San Miguel Energy Corp. (SMEC) and South Premiere Power Corp. (SPPC) offered the lowest rates in Manila Electric Co. (Meralco)’s search for the supply of 1,200 megawatts (MW) starting December.

Meralco’s third party and awards committee received offers from five companies for the supply of 1,200 MW for 10 years, with three companies offering the least cost rates.

Phinma Energy offered 200 MW at a rate of P4.750 per kilowatt-hour, SMEC tendered 330 MW at P4.6314 per kwh, and SPPC submitted a 670MW capacity also at P4.6314 per kwh, totaling 1,200 MW.

The other companies that joined the bidding were SMC Consolidated Power Corp. and Masinloc Power Partners Co. Ltd.

In a phone interview, Meralco spokesperson and public information office head Joe Zaldarriaga said the utility firm’s competitive selection process (CSP) was a success as it garnered a lot of offers with the least cost of power to the benefit of consumers.

“Our CSP today was successful. It resulted in least cost to consumers. The rate is all in and generators assume responsibility for plant outages. Generation companies (gencos) are also liable to pay a fine if they are unable to deliver power,” he said.

Under the contract, the power supplier failing to provide the contracted capacity shall pay a fine of P908 multiplied by each megawatt-hour (MWh) per day, which would be used to reduce the generation charge to consumers.

Following the tender, the bids of the three companies would undergo post-qualification.

“The third party bids and awards committee shall issue respective notice of award in favor of those who satisfactorily passed post-qualification,” Meralco said.

Once cleared, the gencos would start providing their contracted capacity starting Dec. 26, 2019 until Dec. 25, 2029.

Meralco has the option to annually reduce contract capacity by up to 600 MW from Dec. 26, 2023 to Dec. 25, 2025.

Meanwhile, the company is also bidding out 500 MW of supply until 2020, and for greenfield 1,200 MW supply until 2024.

Earlier, Meralco president and CEO Ray Espinosa said that given the number of firms that have expressed interest, “we could say that it is a competitive field already.”

“Even while the year started slow with energy sales volume growing only by two percent in the first quarter, the grid was soon saddled with a series of Red and Yellow Alerts starting March as a result of maintenance and forced outages,” he said.

“The supply capacity was further challenged with the increased consumption as temperature rose to 30.1 degrees Celsius, the highest average temperature for the month of June, in the last five years. Given this, we are focused on sourcing at the best possible least cost and on ensuring adequate stacking to minimize, if not avoid, power interruptions,” Espinosa said.