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Thursday, May 23, 2024

Meralco to procure supply from spot market as 300-MW GNPower deal ended

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Power retailer Manila Electric Co. said Wednesday it would start procuring supply from the Wholesale Electricity Spot Market after its 30-day emergency agreement with Aboitiz Power Corp.-controlled GNPower Dinginin Ltd. for 300-megawatt baseload capacity ended Wednesday, thus exposing consumers to higher electricity rates.

“For now, [there is] no other choice but [to procure from] WESM [Wholesale Electricity Spot Market]. We are working with DOE [Department of Energy] and other gencos [generation companies] to mitigate the impact to consumers,” Meralco first vice president and head of regulatory management Jose Ronald Valles said.

Meralco said it was working closely with the Department of Energy and other industry players to ensure adequate supply and protect customers from volatile and higher WESM prices, which would be crucial with the anticipated increase in demand during the dry months.

The move will affect consumers who are already facing higher rates next month with the completion of Meralco’s distribution refund of P0.1923 per kilowatt-hour for residential consumers.

Valles said Meralco would announce details once they finalized any arrangement.

WESM is the trading floor of electricity where prices are driven by demand and supply, resulting in the volatility of electricity prices. WESM prices are generally higher than those charged under power supply agreements.

Meralco’s supply agreement with GNPower Dinginin Ltd. for its 1,336-MW GNPower Dinginin Plant in Mariveles, Bataan, with a fixed price of P5.95 per kilowatt-hour, became effective on Dec. 15, 2022 and ended on Jan. 25, 2023.

The EPSA partially replaced the 670-MW capacity under Meralco’s 2019 power supply agreement with SMC Global Power Holdings Corp. subsidiary South Premiere Power Corp., which was subjected to a 60-day temporary restraining order issued by the Court of Appeals.

GNPower Dinginin’s offer is higher than SPPC’s contract of P4.30 per kWh under the 2019 PSA. It is also higher than if the Energy Regulatory Commission approved the SPPC application for a rate hike.

Aboitiz Power confirmed the end of the 30-day EPSA. “We remain grateful for the opportunity to contribute to the delivery of a much-needed energy supply covering the Meralco franchise. In the event that Meralco launches another competitive selection process, where the terms of reference will be reasonable, AboitizPower will certainly participate,” it said.

Meralco said the GNPower Dinginin EPSA lessened its exposure to the WESM and “partly shielded its customers from volatile and potentially higher generation costs.”

SPPC announced it would stop supplying to Meralco following the CA decision, prompting the distributor to look for other suppliers or tap the WESM.

SMCGP asked the ERC for a temporary rate increase, citing gas constraints for SPPC’s Ilijan plant and an unprecedented rise in coal prices for the 1,200-MW Sual coal plant in Pangasinan under San Miguel Energy Corp.

The ERC rejected the petition, promoting SMGCP to elevate the matter to the Court of Appeals.

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