ERC to review Meralco-GNPD power deal

THE Energy Regulatory Commission (ERC) will review if the emergency power supply deal between Manila Electric Co. (Meralco) and Aboitiz Power Corp.’s GNPower Dinginin Ltd. Co. (GNPD) is reasonably priced, the agency’s top official said.

In a Viber message, ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said the energy regulator will determine the “reasonableness” of the agreed rates under the emergency power supply agreement (EPSA).

“Meralco and GNPD have not filed with the ERC their application for approval of their emergency power supply agreement. Once it is filed, the ERC shall determine the reasonableness of the tariff,” Ms. Dimalanta said.

Ms. Dimalanta said that a refund is possible if the commission determines that the rates imposed are not reasonable as mandated by the Department of Energy’s (DoE) competitive selection process.

“Only the approved rates would be authorized for collection,” she said.

For the February supply period, Meralco secured an EPSA with GNPD covering 300 megawatts (MW) of supply. The deal has a full fuel pass-through structure with an implemented rate of P8.53 per kilowatt-hour (kWh).

In December, Meralco also secured an EPSA for 300 MW with AboitizPower for a rate of P5.96 per kWh from Dec. 15, 2022 until Jan. 25, 2023.

Lawrence S. Fernandez, Meralco vice-president and head of utility economics, said in a press briefing on Friday that the deal contributed to the increase in the generation charge for the March billing.

“It is already included because the PSA with SPPC (South Premiere Power Corp.) has been suspended since December. The replacement contract that we entered to cover the supply that would have been sourced from [SPPC] was already incorporated in the generation charge,” Mr. Fernandez said.

However, Mr. Fernandez said that GNPD did not offer to extend its EPSA with Meralco.

“Meralco has sought offers from other suppliers and this has been submitted to the [DoE] for its consideration and approval,” he said.

To recall, Meralco’s decision to secure an EPSA came after its 670-MW power supply deal with SPPC, the administrator of the gas-fired power plant in Ilijan, Batangas, was subjected to a writ of preliminary injunction issued by the Court of Appeals (CA).

The 670-MW contracted capacity is supposed to be covered by Meralco’s PSA with SPPC, which was agreed upon in 2019 for a period of 10 years at P4.2455 per kWh.

In December, SPPC issued a notice of cessation of its supply to Meralco.

This month, typical households in areas served by Meralco can expect their electricity bills to go up by around P109 due to an increase in the generation charge.

Meralco said that the overall rate this month surged to P11.4348 per kWh compared to P10.8895 per kWh a month ago.

The generation charge went up by P0.4636 to P7.3790 from P6.9154 per kWh in the previous month due to higher supply costs brought by the Malampaya gas-to-power facility’s maintenance shutdown from Feb. 4 to 18.

Households that consume 200 kWh will see their monthly bills increase by around P109. Residential customers consuming 300 kWh, 400 kWh, and 500 kWh will see an increase of P164, P218, and P273, respectively, in their monthly bills. 

“This month’s generation charge increase would have been significantly higher, but we took the initiative to cushion the impact in the bills of our customers by coordinating with some of our suppliers to defer collection of portions of their generation costs,” Meralco Head of Regulatory Management Office Jose Ronald V. Valles said in a media release.

Mr. Valles said that around P1.1 billion in deferred cost reduced the generation rate by around 40 centavos per kWh and will be billed on a staggered basis in April and May.

In a statement on Friday, Terry L. Ridon, convenor of think tank InfraWatch PH, called on the ERC to reject any emergency power supply deal in the Meralco franchise area that is priced higher than last year’s rejected agreement with the units San Miguel Corp.

He said the commission “will effectively facilitate profiteering if it allows generation firms to impose higher rates despite lower operating costs compared to last year’s price fluctuations.”

“These coal and gas companies can’t keep treating consumers as a cushion to the high costs of their insistence on selling power using expensive fuels. This is precisely why we have been calling on our energy authorities to mandate means to shield consumers from costs that keep getting passed on to them, foremost of which would be requiring all power contracts to have fixed rates from the get-go,” advocacy group Power for People Coalition said in a media release.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose