Meralco CSP: Competition anchors tariffs, select upside for winners
From AB Capital's The Opening Bell: Three Moves
Event
Meralco confirmed 15 power producers participating in its 200MW RE baseload Competitive Selection Process (CSP), including ACEN, First Gen/EDC, AP Renewables, and San Miguel units, with bids due Feb 16. The CSP supports MER’s RPS compliance and allows REC-backed offers from conventional plants.
View
The large, high-quality bidder pool reinforces pricing discipline, helping MER maintain cost visibility. While competition limits sector-wide tariff gains, winners with efficient portfolios or favorable REC assumptions could achieve meaningful margin improvements, creating upside for select gencos.
Catalyst
Key milestones include bid submission on Feb 16, pre-qualification outcomes, PSA signing, and ERC approval. Gains are likely concentrated among the most efficient and cost-competitive players.
Action
We maintain Outperform on MER. The CSP further de-risks procurement and earnings visibility. For gencos, upside is selective, favoring those with low-cost RE assets and flexible structures, while broader competition keeps pricing pressure in check.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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