ERC rejects Meralco-San Miguel power supply agreement

The Energy Regulatory Commission (ERC) has rejected Manila Electric Co.’s (Meralco) plan to secure 200 megawatts (MW) of supply from a company under San Miguel Corp. (SMC), citing an absence of immediate need.

Through a ruling dated July 14, the ERC denied Meralco and Sual Power Inc.’s petition seeking approval of their power supply agreement.

“Based on the foregoing, the Commission finds that the evidence presented is insufficient to establish the urgency and immediate necessity for the implementation of the subject PSA,” the ERC said.

Sual Power operates a 1,200-MW thermal plant in Pangasinan. It is a subsidiary of San Miguel Global Power Holdings Corp., the energy arm of SMC.

Competitive bidding

The power generation firm won in a recent competitive selection process conducted by Meralco after proposing the lowest cost offer of P4.2955 per kilowatt hour.

The power supply deal hopes to cover Meralco’s 200-MW baseload requirement over four years. This is meant to meet requirements under renewable portfolio standards (RPS), a policy that demands industry players to source 11 percent of their power sales from renewable energy sources.

While Sual Power uses coal, the company can still commit to the deal through renewable energy certificates that represent an equivalent amount of power generated from clean energy sources.

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Based on its assessment, the ERC said the annual supply-demand scenario of Meralco is expected to have a surplus of 479.25 MW for this year even without implementing the deal with Sual Power.

In June, Meralco said it had obtained government clearance to pursue an auction for its 600-MW baseload supply needs. The delivery of the initial 300 MW is targeted by Feb. 26, 2028, with the additional 300 MW coming in a year later.

Meralco is the biggest power distributor in the Philippines, delivering electricity to more than 8.2 million consumers in Metro Manila and nearby provinces, including Bulacan, Cavite and Rizal and parts of Laguna, Batangas, Pampanga and Quezon.