Power retailer Manila Electric Co. will start negotiating with South Premiere Power Corp., a company owned by San Miguel Corp., on the terms of their 2019 power supply agreement following the writ of preliminary injunction order issued by the Court of Appeals in January this year, an executive said Tuesday.
Meralco first vice president and head of regulatory management Jose Ronald Valles said they wrote a letter to SPPC in compliance with the CA’s WPI order.
The CA’s Thirteenth Division issued a WPI in favor of SPPC, enjoining Meralco from implementing the order of the Energy Regulatory Commission directing the parties to honor their fixed-rate power supply agreement signed in 2019.
“To be clear, the grant of the WPI suspends the continued implementation of the PSA but does not terminate the same. This is to allow the parties to negotiate the terms of the PSA,” according to the CA ruling promulgated on Jan. 25.
Valles said the letter is “for us to enter into good faith negotiations to try to settle the active case.”
WPI is an ancillary remedy sought by SPPC in its petition for certiorari to assail the ERC order that denied its joint motion with Meralco for a price adjustment dated May 10, 2022.
SPPC and Meralco sought a temporary rate hike adjustment on their 670 MW PSA because of natural gas constraints, which the ERC rejected. SPPC owns the 1,200-megawatt Ilijan natural gas power plant in Batangas.
Meanwhile, Valles asked GNPower Dinginin Ltd. for an extension of their offer to supply Meralco with 300-MW capacity to partly cover the 670-MW supply from SPPC, which was subject to the injunction.
“We are trying to negotiate for lower tariff that’s equivalent to 300 MW,” Valles said.
Meralco’s emergency power supply agreement with GNPD ended on Feb. 25 at a rate of P8.5250 per kilowatt-hour.
Valles said that before Meralco signed the EPSA extension with GNPD covering Jan. 24 to Feb. 25, the company forecasted higher spot market prices.
“What we did was to contract 300 MW of GNPD at a rate we assumed was going to be lower than WESM price to protect our customers against price volatility in WESM. That rate is still subject to ERC approval,” Valles said.
He said Meralco was also on track with its competitive selection process for a combined 480 MW of capacity.
Meralco started the CSPs for 180-MW baseload supply and 300-MW peaking supply in December to cover the expected increase in demand as the economy recovers from the pandemic.
Valles said the CSPs for both supply requirements are ongoing.