The Manila Electric Co. (Meralco), the country’s largest power distributor, pushed back against claims by the Department of Energy (DOE) that its delayed power supply agreement (PSA) is contributing to high electricity prices, calling the accusations “false and misleading.”
Meralco called comments made by Energy Assistant Secretary Mario Marasigan at a news conference as a mischaracterization of the status and cost implications of its PSA with Excellent Energy Resources Inc. (EERI).
EERI won the bid for a 1,200-megaWatt baseload supply deal that was part of Meralco’s 1,800 MW competitive selection process (CSP) conducted in 2024.
Meralco said the supply deal is still in the commissioning stage and includes built-in safeguards to protect consumers in case of delay. “In case of unexcused delay, Meralco is only obligated to pay the lower of the replacement power cost or the PSA rate approved by the Energy Regulatory Commission (ERC),” Meralco explained.
The power distributor further clarified that recent spikes in electricity prices on the Wholesale Electricity Spot Market (WESM) are due primarily to unplanned outages at aging power plants, not the delay in implementing the EERI PSA. “High WESM prices are a symptom of broader supply issues, particularly the lack of new baseload capacity,” Meralco said.
Luzon grid has seen limited addition of large-scale power plants in recent years. Apart from EERI and the GNPD plant—also a winning bidder in last year’s CSP—no new baseload facilities have come online since 2002, Meralco noted. The company warned that relying heavily on intermittent sources like solar, which are unavailable at night, has compounded price volatility.
“Blaming one PSA for a systemic supply shortfall is short-sighted,” Meralco asserted, adding that it is fulfilling its role in procuring power through CSPs based on DOE-approved procurement plans. The company stressed that it cannot be legally obligated to over-contract capacity to fill broader grid deficiencies, as this would violate the principle of least-cost procurement and expose consumers to stranded costs.
Further delays in PSA approvals by the ERC have also hampered implementation of power deals that could ease supply pressures. Meralco revealed that several PSAs—such as those with San Roque Hydropower, Gigasol3, and Mariveles Power Generation Corp—remain pending before the regulator, despite being scheduled to begin delivery in early 2025.
“The regulatory lag is a real barrier to supply security,” Meralco said, pointing out that even EERI only received final ERC approval after its commercial operation date had passed. Nevertheless, EERI is supplying commissioning energy at a lower rate in the meantime, which benefits consumers.
Meralco reiterated its commitment to ensuring stable and affordable electricity, especially during the summer months when demand typically surges. It urged both the DOE and ERC to work collaboratively with industry stakeholders to expedite approvals and encourage investment in new generation capacity.
