The Energy Regulatory Commission approved with finality the power supply agreement between First NatGas Power Corp., a unit of First Gen Corp., and Manila Electric Co., involving 414 megawatts.
First Gen said in a disclosure to the stock exchange Monday it received the ERC’s decision after making the request in March 2018.
The ERC granted final approval of the PSA and affirmed the applicable rates under the provisional authority granted by the ERC in its June 2018 order, subject to certain modifications and conditions.
“The joint application for final authority to the power supply agreement between Manila Electric Co. and First Natgas Power Corp. is hereby approved subject to the following modifications and certain conditions,” ERC said in its decision dated May 26.
First Gen said FNPC was evaluating the decision. FNPC owns the 414-megawatt San Gabriel combined-cycle natural gas-fired power plant.
The ERC said FNPC’s rates to Meralco are lower than the range of implemented rates for the natural gas plant. It said, however, the procurement of replacement energy beyond the outage allowance should be the responsibility of FNPC.
It said the outage allowance should be adjusted to 20.20 days, consisting of 12.5 days for the planned outage and 7.7 days for the unplanned outage.
The regulator also directed Meralco to submit its automatic generation rate adjustment computation on the monthly fuel cost.
Meralco and First Natgas signed a PSA in 2018 to sell and purchase about 414 MW of baseload capacity to meet the anticipated high power demand.
Power will be sourced from the San Gabriel combined-cycle natural gas-fired power plant at the First Gen Clean Energy Complex in Batangas City.
The application stated that the 414-MW capacity from the San Gabriel natural gas plant of FNPCC at P3.8637 per kilowatt-hour provides a lower power cost compared to the simulated effective cost of P4.4405 per kWh at the spot market.
The PSA carries a six-year term “using gas from the Malampaya field, but, if liquefied natural gas becomes available, the PSA could be extended upon mutual agreement with Meralco.” The PSA is set to expire on Feb. 23, 2024, unless otherwise extended by the parties.