THE Manila Electric Co. (Meralco) was allowed by regulators to source up to 64 megawatts (MW) of additional capacity from interim bilateral supply agreements with the units of Global Business Power Corp. (GBPC).
“The [Energy Regulatory Commission or ERC] finds that the approval and implementation of the subject Interim Power Supply Agreements [IPSAs] will be beneficial to Meralco’s customers by way of reliable, continuous and efficient supply of power within its franchise area at reasonable costs,” said the ERC in its 49-page decision released last week.
In particular, the utility firm sought the green light to source up to 37 MW from Toledo Power Co. (TPC) and 27 MW from Panay Power Corp. (PPC).
TPC owns the 40-MW diesel-fired power plant in Toledo City, Cebu. The 72-MW diesel-fired power plant in La Paz, Iloilo City, is owned by PPC.
The IPSAs are meant to mitigate exposure to the Wholesale Electricity Spot Market (WESM) until July when reserve capacity, according to the National Grid Corp. of the Philippines, will be below the required contingency reserves due to scheduled maintenance shutdowns and forced outages of major base-load coal-and gas-fired power plants in Luzon.
“The simulated delivered price in Meralco and PPC’s IPSA, upon consideration of the interim mitigating measure in the WESM (Wholesale Electricity Spot Market), would result to an overall savings of P0.0170/kWh for the period of March 2015 to July 2015,” said
the ERC.
The IPSA between Meralco and TPC will, likewise, result in overall savings of P0.0213 per kWh.
If these IPSAs are not implemented, Meralco will be constrained to source from the WESM, where prices are volatile, especially during March to July this year.This can be further aggravated and would likely
result in higher WESM prices in light of the very tight supply under thin reserve margin conditions during said period.
The IPSAs, Meralco said, will ensure continuous and reliable electricity at reasonable prices for Meralco customers during the critical period until July
this year.