ERC rejects Meralco-SMC power supply deal

MANILA, Philippines — The Energy Regulatory Commission (ERC) has thumbed down Manila Electric Co. (Meralco)’s planned procurement of a 200-megawatt (MW) baseload power supply from San Miguel Corp.

In a 20-page decision dated July 14, the ERC ruled that Meralco and San Miguel’s Sual Power Inc. (SPI) failed to establish the urgency and immediate necessity of their proposed power supply agreement (PSA).

Citing Meralco’s submitted annual supply-demand scenario, the regulator said the utility giant is projected to have a surplus of 372 MW in its power requirements this year.

“Conversely, for the years 2027 to 2034, Meralco is projected to have a supply deficit ranging from 40 MW to 768 MW,” it added.

The proposed PSA resulted from a competitive selection process conducted by Meralco, in which SPI emerged as the winning bidder after submitting the lowest offer of P4.2955 per kilowatt-hour (kWh).

In their joint application before the ERC, the companies said Meralco customers could save up to P631 million in electricity costs under a four-year supply deal.

They noted that the delivered rate under the PSA would be way lower than the effective cost of P4.656 per kWh, which would have been the price if the equivalent capacity had been sourced from the spot market.

Beyond ensuring reliable and affordable power supply, the 200-MW baseload power deal is expected to help Meralco meet its obligations under the government’s Renewable Portfolio Standards (RPS).

The policy requires power utilities like Meralco to source a portion of their supply from eligible renewable energy plants.

The ERC, in its latest decision, directed Meralco to submit detailed information on the calculation of its annual available RPS compliance.

The country’s largest power utility was also ordered to file a report confirming whether the subject PSA has already been considered in the computation of its annual available RPS compliance.

Currently, Meralco provides electric service to more than eight million customers in Metro Manila and nearby provinces.