Successful CSP to result in P9 B annual savings for Meralco users

Customers of Manila Electric Co. (Meralco) are expected to save over P9 billion annually from its first successful competitive selection process (CSP).

Meanwhile, Meralco’s search for another 1,200-megawatt (MW) supply from greenfield projects was declared a failure.

Meralco said the resulting prices from the CSP of 1,200-MW brownfield supply are significantly lower than their average generation cost today of around P5.88 per kilowatt-hour (kwh), VAT inclusive.

This as Meralco’s third party bids and awards committee (TPBAC) declared Phinma Energy Corp., San Miguel Energy Corp. (SMEC) and South Premiere Power Corp. (SPPC) to have offered the least cost rates.

Phinma Energy Corp.’s bid was for contract capacity of 200 MW with an all-in headline rate of P4.745 per kwh and computed all-in levelized cost of electricity (LCOE) of P4.8849 per kwh.

San Miguel Energy Corp.’s bid was for 330 MW at all-in headline rate of P4.6314 per kwh and computed all-in LCOE of P4.9299 per kwh.

South Premiere Power Corp.’s bid was for 670 MW and had an all-in headline rate of P4.6314 per kwh and computed all-in LCOE of P4.93 per kwh.

Meralco said a successful CSP would ultimately result in least cost to consumers.

“Once implemented starting Dec. 26, 2019, Meralco consumers are expected to save around P0.28 per kwh or P9.46 billion for 10 years from the new power supply agreements (PSA) to be executed with the winning power suppliers,” it said.

Meralco’s CSP should benefit the consumers both on service and on cost, Laban Konsyumer Inc. president Victorio Dimagiba said in a text message.

“What is important, in addition to the reliability of service, is the blended rate and net impact on a per kwh basis should be lower than the current Meralco generation charge. That’s the job of Energy Regulatory Commission (ERC) when it hears the PSA contract,” he said.

Meralco clarified that the all-in rate already includes line rental and VAT, and the cost of replacement power for all plant outages.

Meanwhile, the generator companies will also be penalized if they are unable to deliver power, which will be used to reduce the generation cost to the consumers.

“I just want to express our appreciation to the TPBAC and TWG (technical working group) for a well run process. It was a good experience and hopefully we will have more pro-consumer bids moving forward,” Phinma Energy president and CEO Eric Francia said.

Meanwhile, the Meralco TPBAC declared the CSP for the 1,200-MW greenfield supply a failed bidding.

Only Atimonan One Energy Inc. (A1E), a unit of Meralco Powergen Corp., submitted its bid yesterday.

Interested bidder PanAsia Energy Inc. withdrew its participation in the bidding process ahead of the bid deadline.

Meanwhile, Mariveles Power Generation Corp. of the San Miguel Group withdrew from the CSP while First Gen Corp. failed to arrive and submit its bid documents.

“Based on the foregoing, the TPBAC has determined that there was a failure of bidding and has resolved to report back to the distribution utility on this matter,” TPBAC said.

Following the failed bidding, the Department of Energy (DOE) will look into the matter, Energy Secretary Alfonso Cusi said in a text message.

“On greenfield failed bidding, we will study the reasons, review TOR (terms of reference) and take appropriate action/s,” he said.

The power distributor will issue another invitation to bid for the 1,200-MW greenfield supply, Meralco SVP and head of legal William Pamintuan said.

“The DOE’s CSP Guidelines provide for a possible re-bidding of the said baseload requirement, and Meralco will carefully consider the same and will also submit the planned way forward to the DOE,” Pamintuan said.

While the DOE’s CSP rules allow for another round of bidding, more generation companies (gencos) should participate in Meralco’s bidding, LKI’s Dimagiba said.