Manila Electric Co. asked the Department of Energy to reconsider its decision rejecting the interim power supply agreement between the electricity retailer and Masinloc Power Partners Co. Ltd. of the San Miguel Group, a top executive said Tuesday.
Meralco signed an IPSA with MPPCL to supply an additional 220 megawatts to 260 MW of electricity in anticipation of the tightness of supply during the dry months.
Meralco president Ray Espinosa said during the Management Association of the Philippines virtual membership meeting the utility was surprised to learn that the DOE denied the IPSA with Masinloc when a similar application by an electric cooperative was approved.
“So now, we have to write to DOE and seek reconsideration of their decision and also try to gain an understanding on what’s different between our request [and the other electric cooperative],” Espinosa said.
He said the application was filed in April ahead of the dry months, but was not acted upon by the DOE until the last hearing of the Senate called by Senator Sherwin Gatchalian when the utility was informed its equest would be denied because of the issue of prices at the Wholesale Electricity Spot Market.
“But it’s a combination of WESM prices and shortage. If there was no shortage of power supply, then who would go to the WESM. Then the prices would be reasonable,” Espinosa said.
“Those are instances where we need government support. We don’t want to eschew the CSP, but there are certain instances where we do need to contract on an emergency basis to address a looming power shortage and also to avoid very high WESM prices. All of that redound to the benefit of consumers,” he said.
Espinosa said government should be responsive to the dips in supply especially during the dry months when demand peaks and supply decline because of limited contribution from hydropower plants.
“If we contract capacity for one whole year just to address this dips that happen only in summer, it’s going to be very expensive for the customers because they’ll have to pay for one year’s cost to address only two months of summer,” Espinosa said.
“So we tend to go to the WESM to pick up that supply. But if WESM is not sufficient, if there is a supply shortage in the WESM, we should be able to and we should be allowed by DOE to contract emergency power supply agreements as long as it is less than what year and you go to DOE to get approval,” Espinosa said.
He also encouraged more companies such as those in Luzon to participate in the interruptible load program of the government.
“Because one thing that we have to understand is if there is a Luzon-wide shortage, it affects the Meralco franchise even if we are almost fully contracted because the rule here is if there is a supply shortage, it affects the entire Luzon. All of the DUs and all of the electric cooperatives would have to share in that burden and deload themselves,” he said.