Regulator clears Meralco’s 1,200-MW deal with SMC unit
Manila Electric Co.’s (Meralco) 1,200-megawatt (MW) power supply deal with a subsidiary of San Miguel Global Power Holdings Corp. (SMGP) secured approval from the Energy Regulatory Commission (ERC), albeit with mounting conditions.
In a decision issued on Thursday, the ERC said the Pangilinan-led power distributor’s supply contract with Excellent Energy Resources Inc. (Eeri) has been “approved subject to” a number of prerequisites.
It was in late 2023 when Meralco bared its plan to source an additional 1,800 MW of supply, as it aimed to boost its baseload capacity with the initial 1,200 MW targeted for delivery starting December 2024. The remaining 600 MW, meanwhile, is eyed for delivery by May 2025.
Earlier this year, Eeri offered the best bid for 1,200 MW. At that time, the company proposed a levelized cost of electricity rate of P7.1094 per kilowatt-hour (kWh).
The regulator-approved rate, however, was lower at P6.0038 per kWh. Meralco’s supply deal with Eeri is set for 15 years.
Standard conditions
When asked about the numerous conditions set by the ERC—which totaled 16—chair and chief executive officer Monalisa Dimalanta said some of those were “standard conditions.”
“But we needed to add new ones. Some of which are intended to mitigate the volatility of fuel and freight costs that are passed on to consumers,” she said in a text message on Friday.
Dimalanta also said that the other conditions imposed were linked to the review of the Philippine Competition Commission (PCC) on a $3.3-billion energy deal involving Meralco PowerGen Corp. (MGen), Aboitiz Power Corp. and SMGP. She said the deal poses possible “changes in the ownership of Eeri and the gas terminal.”
Under their agreement, MGen, the power generation arm of Meralco, and AboitizPower would jointly invest in SMGP’s 1,278-MW Ilijan gas-fired power plant and the new 1,320-MW facility, which is owned by Eeri.
That deal also entails the acquisition of nearly 100 percent of the liquefied natural gas (LNG) import and regasification terminal owned by Linseed Field Power Corp., a local unit of global infrastructure firm Atlantic, Gulf & Pacific Co. that received the country’s first LNG cargo delivery in April 2023.
Limitations
“Given that MGen—a Meralco subsidiary—will be a part-owner if the transactions are approved, depending on the action of and conditions imposed by PCC [if any], we may need to revisit compliance with the market share limitations, bilateral contracting limits and requirements on DUs (distribution utilities) engaged in other businesses under Epira (Electric Power Industry Reform Act),” Dimalanta said.
MGen president and chief executive officer Emmanuel Rubio earlier said that the group expected to get the competition watchdog’s approval by the third quarter of the year. However, the commission has yet to release its decision.
