The Manila Electric Co. (Meralco) has yet to secure a new emergency power supply agreement (EPSA) after the expiry of the 300-megawatt baseload transaction with Aboitiz Power’s GN Power Dinginin.
Lawrence Fernandez, Meralco vice president and head of utility economics department, said in a briefing on Friday that Aboitiz Power did not offer to extend the EPSA which expired on February 25.
“GN Power Dinginin did not offer to extend the EPSA with Meralco. But Meralco sought offers from other suppliers and this have been submitted to the DOE (Department of Energy) for its consideration and approval,” Fernandez said.
Meralco did not identify the companies it approached for the EPSA application.
Think tank Infrawatch PH said the Energy Regulatory Commission (ERC) must “reject” any EPSA in the Meralco franchise area that proves higher than last year’s rejected San Miguel-Meralco price proposal of P6.0691 per kilowatt-hour (kWh).
“While the rejected price proposal was around 34.8 percent higher than the original terminated power supply agreement (PSA), the recently lapsed second EPSA with the Aboitiz Group was 89.4 percent higher than the terminated PSA of P8.5250 per kWh. To allow the continuation of such exorbitant rates in prospective EPSAs amounts to criminal negligence of the commission’s duty to ensure the least cost of electricity to consumers,” said Terry Ridon, Infrawatch PH convenor, in a statement.
Ridon said power generation companies have no basis to impose higher rates at this time when global coal prices have reverted, with prices dropping around 60 percent from last year’s highs.
“The rejected price proposal was made at a time of unprecedented coal prices, selling as high as $457.8 per ton. The price of coal today hovers merely at around $180 per ton. As such, any rate higher than the rejected price proposal should be outrightly rejected by the ERC, not only because it their duty to enforce the least cost, but also because the current market environment cannot serve as a basis for higher rates. The Commission will effectively facilitate profiteering if it allows generation firms to impose higher rates despite lower operating costs compared to last year’s price fluctuations,” Ridon asserted.
This developed as Meralco adjusted its power rates in Metro Manila this month after a brief reduction in February due to higher costs of generating power.
The P0.5453 per kWh upward adjustment brings the total Meralco rate to P11.4348 from last month’s P10.8895 per kWh equivalent to an increase of P109 for residential customers consuming 200 kWh a month.
Meralco said the generation charge went up by P0.4636 to P7.3790 from P6.9154 per kWh the previous month due to higher supply costs as gas-fired power plants were forced to temporarily use costlier alternative fuels.
Charges from independent power producers (IPPs) also increased by P0.5784 per kWh due to lower plant dispatch and the peso depreciation which affected 98 percent of IPP costs that are dollar-denominated.
Wholesale Electricity Spot Market (WESM) charges were also higher by P1.4795 per kWh, resulting from an increase in demand in the Luzon grid although charges from PSAs remained generally flat due to the deferral of the collection of a portion of PSA costs.
All other charges, including transmission charge and taxes, showed a net upward adjustment of P0.0817 per kWh while the collection of the P0.0364 feed-in-tariff allowance remains suspended until August this year.
Meralco reiterated it only earns from the distribution, supply and metering charges which dropped by P0.0360 per kWh in August 2022.
The company said the power it distributed equal to 22 percent came from the Wholesale Electricity Spot Market (WESM), 35 percent from IPPs and 43 percent from PSAs.
