The Energy Regulatory Commission approved the extension of the interim power supply agreement between distributor Manila Electric Co. and 1590 Energy Corp. up to July 2015.
ERC said in its decision there was a need for Meralco to contract additional power in the wake of the impending power shortage in the dry months this year. 1590 Energy is the operator of the 140-megawatt Bauang diesel power plant.
Meralco said an extension of the agreement would ensure the availability and affordability of electricity to customers and mitigate exposure to the Wholesale Electricity Spot Market, the country’s trading floor of electricity.
Meralco cited figures from system operator National Grid Corporation of the Philippines that reserve capacity would be below the required contingency reserves from January to July 2015, due to the scheduled maintenance shutdown and forced outage of major baseload coal and gas-fired power plants in Luzon.
“This shall result in a tight supply situation,” Meralco said.
Meralco said with the extension of the term of the supply agreement to July 25, 2015, the simulated delivered prices from January to July 2015 would result in overall cost savings in blended generation charge of P0.0922 per kilowatt-hour, or a total of P1.6055 billion.
Meralco earlier agreed to purchase up to 140 MW from the Bauang diesel power plant of 1590 Energy.
Meanwhile, Meralco sought approval for a power supply agreement with Panasia Energy Inc. for additional capacity until July. Meralco and Panasia filed a joint application with the ERC citing the need for additional capacity for January to July.