Meralco secures power supply deal with GNPower
MANILA, Philippines — The Manila Electric Co. (Meralco) has secured a new emergency power supply deal with the joint venture of the Aboitiz and Ayala groups that would help reduce the power distributor’s dependence on volatile spot market prices this month.
Meralco said it executed another emergency power supply agreement (EPSA) with GNPower Dinginin Ltd. (GNPD) for the supply of 300-megawatt (MW) baseload capacity effective from February 3 to February 25.
“Prior to the Jan. 25, 2023 expiration of the original emergency PSA with GNPD, Meralco wrote to ask for an extension,” Meralco vice president and head of utility economics department Lawrence Fernandez said.
“GNPD responded with another 300-MW baseload emergency PSA, to expire on Feb. 25, 2023. This was signed and implemented beginning Feb. 3, 2023,” he said.
Meralco said the EPSA lessens its exposure to the Wholesale Electricity Spot Market (WESM), which in turn, shields its customers from volatile and potentially higher generation costs.
The Independent Electricity Market Operator of the Philippines last Friday said average WESM prices has already risen to P7.43 per kWh in the first few days of the February billing period from the average of P5.76 per kWh in January.
The WESM operator is projecting a P7.55 per kWh average market price for the entire month of February.
For Meralco, it said the new contract with GNPD forms part of efforts to ensure sufficient supply and manage its rates as a result of the cessation of 670-MW supply covered by its PSA with South Premiere Power Corp. (SPPC), which was subjected to a writ of preliminary injunction issued by the Court of Appeals.
SPPC officially ceased supplying Meralco under its PSA on Dec. 7, 2022 following the issuance of a temporary restraining order by the Court of Appeals.
To lessen its exposure to the WESM with the absence of its 670-MW PSA with SPPC, Meralco negotiated for EPSAs with power generators and eventually entered into one last December with GNPD covering 300 MW.
The EPSA, which started on Dec. 15, 2022 and ended on Jan. 25, had a rate of P5.96 per kWh.
Meralco did not disclose the rate of the current EPSA with GNPD.
Fernandez, however, said there were changes to the terms, but he did not specify.
GNPD, which is a joint venture among Aboitiz Power Corp., ACEN Corp. and Power Partners Ltd. Co., owns a 1,336-MW coal-fired power plant in Mariveles, Bataan.
Meralco has been working closely with the government and all relevant industry players to ensure adequate supply and protect its customers from volatile and higher WESM prices, which is especially crucial with the anticipated increase in demand during the summer months.
As early as December last year, Meralco has started the competitive selection process for additional 480-MW supply.
Meralco also continues to urge its customers to practice energy efficiency for better management of their monthly electricity consumption.
Further, the power distributor is encouraging more companies to participate in the interruptible load program (ILP), which boosts the available supply and helps spare households from power interruptions during instances of red alerts.
As of end-January, Meralco said a total of 117 customer accounts with a total committed de-loading capacity of around 560 MW are part of the ILP in its franchise area.
Meralco is the largest electric power distribution company and the biggest private sector utility in the country, with a consolidated customer count of 7.6 million.