Manila Electric Co. (Meralco) has signed power supply agreements (PSAs) expected to lower power costs for electricity consumers.
The supply deals with PHINMA Energy Corp., San Miguel Energy Corp. and South Premier Power Corp. involve a contract capacity of 1,200 megawatts (MW) and will be effective Dec. 26, 2019.
The agreements will still go through the approval process of the Energy Regulatory Commission.
Meralco said a competitive selection process (CSP) was conducted as specified in a Department of Energy (DOE) circular that requires all distribution utilities to procure power through CSPs. This was administered by a third-party bids and awards committee formed according to the DOE circular.
Lawyer Ferdinand Domingo led the committee, which also included. Adrian Cristobal, Jr., a former trade and industry secretary. Both represented consumers.
Bids were opened and evaluated on Sept. 9,2019. Bids from PHINMA Energy, San Miguel and South Premier Power were declared the best bids. After the post-qualification process, the committee issued notices of award in favor of the three best bids.
PHINMA Energy signed for a contract capacity of 200 MW with an all-in headline rate (VAT inclusive) of P4,7450 per kilowatt-hour (kWh) and computed all-in Levelized Cost of Electricity (LCOE) (VAT inclusive) of P4.8849/kWh. San Miguel signed for 330 MW at an all-in headline rate (VAT inclusive) of P4.6314 kWh and computed all-in LCOE (VAT inclusive) of P4.9299/kWh. South Premier signed a contract for 670 MW with an all-in headline rate (VAT inclusive) of P4.6314/kWh and computed all-in LCOE (VAT inclusive) of P4.9300/kWh.
“We are confident that the prices resulting from this bidding are the least cost to consumers. In fact, the all-in rate includes line rental and Value Added Tax (VAT) and the cost of replacement power for all plant outages, Meralco President and CEO Ray Espinosa said.
If the power companies are unable to deliver power, they will be liable to pay a fine, which will be used to reduce the generation cost charged to consumers.
Espinosa said prices from the new PSAs were significantly lower than the average generation cost of about P5.88/kWh (VAT inclusive).
“Meralco consumers are expected to save around P0.28/kWh or P9.46 billion annually for 10 years,” he said.
There are about 6.7 million residential consumers from Bulacan, Rizal, Laguna, parts of Quezon Province, Batangas City and the entire National Capital Region.
Meralco serves at least 25.30 percent of the country’s 26.4 million households. Melo M. Acuña