Meralco, San Miguel expand power supply deal by 290 MW
To meet the increasing demand in the metropolis, power distributor Manila Electric Co. (Meralco) has secured additional power supply through its agreement with the energy generation subsidiary of listed conglomerate San Miguel Corp.
In its latest notice, the regulatory agency said it had approved the injection of 290 megawatts (MW) into the power supply agreement between Meralco and San Miguel’s South Premiere Power Corp. (SPPC).
This brings the overall capacity of the supply deal to 1,200 MW, which will be sourced from Ilijan Natural Gas Plant located in Ilijan town, Batangas, which is operated by SPPC. It is subject to the same rate and conditions outlined in the Energy Regulatory Commission (ERC) resolution dated May 9, 2024.
To recall, the ERC approved in principle the power supply agreement (PSA) between these firms covering an initial 910 MW. It was to protect consumers from volatile spot market prices and “displace volumes contracted by Meralco also from the Ilijan plant at higher prices.”
Distribution utilities such as Meralco secure additional supply from the Wholesale Electricity Spot Market (WESM), the centralized marketplace for electricity trading, to meet the electricity demand.
Based on historical data, WESM prices are higher than the rates stipulated in PSAs.
The ERC granted provisional approval to the Meralco-SPPC supply agreement, setting the base rate of P5.9282 per kilowatt hour (kWh).
Its simulations showed that Meralco’s blended generation rate would drop by P0.2828 per kWh, subject to adjustment after the approval of the final PSA.
At that time, the ERC said that although it awarded 890 MW to 1,200 MW capacity under the PSA to SPPC, about 290 MW from the Ilijan power facility had already been contracted under a previous deal at a lower price of P5.1363 per kWh.
Both parties were told to continue honoring and implementing their subsisting supply agreement.
Meanwhile, in a separate resolution, the ERC deferred the deliberation on the appeal of Meralco and SPPC for confidential treatment of information covering their PSA.
“Given the pending issues that needed to be addressed, the resolution of the matter was deferred for further deliberation, with instructions/directives issued to the relevant units,” the ERC said.
