Manila Electric Co., the country’s largest power distributor, gave assurance its competitive selection process for power supply would comply with standards set by the government amid a demand from a legislator seeking to postpone the CSP bidding for 600 megaWatts set on August 2.
Senator Alan Peter Cayetano sought a delay of the bidding as he raised concern over the fairness of the process, citing a provision in the CSP that appears to disfavor older power plants that include those fueled by natural gas from Malampaya.
“Can we honestly say that we are promoting indigenous gas in the Philippines?” asked Cayetano as he pointed out the seemingly unfair provision in the terms of reference of the CSP against old power stations.
Meralco vice president and head of corporate communications Joe Zaldarriaga said the CSP is a government-mandated bidding process that aims to ensure only electricity producers that offer least cost supply will be contracted by a distribution utility to protect consumers against high power rates.
“We would like to emphasize that Meralco strictly follows the requirements of CSP prescribed by the government, which includes securing prior approval from the Department of Energy of our Power Supply Procurement Plan and the corresponding Terms of Reference for every CSP. In the case of our 1800MW and 1200MW CSPs, the TORs also considered suggestions of the Energy Regulatory Commission Chairperson before they were published,” Zaldarriaga said in a statement.
CSP observers, including the DOE and consumer groups, witness the submission and opening of bids—processes that are also streamed live—to ensure transparency.
Since the TORs require prior approval of DOE, tailor fitting to favor a particular generation company is prohibited. Meralco’s TORs promote competition by ensuring that more generation companies are able to participate and offer competitive rates, while at the same time encouraging entry of new or greenfield power plants to replace old and unreliable power plants.
“Any generation company can submit offers for these CSP. While we prioritize power plants using indigenous fuel as required by DOE, we ensure that it will not violate our least cost mandate under the law. There is no preferential treatment and Meralco always awards the contracts to the lowest compliant bidder,” Zaldarriaga said.
He pointed out that In its recently completed CSP for its 1,200-MW baseload requirement, Meralco awarded the power supply agreement to South Premiere Power Corp. after it submitted the lowest offer of P7.0718 per kilowatt-hour.
It bested the P7.1006 per kWh offer of the joint venture of Limay Power Inc. and San Roque Hydropower Inc. for 150MW capacity; and First Natgas Power Corp.’s bid of P8.4489 per kWh.
First Natgas, which uses the indigenous Malampaya gas for the San Gabriel power plant, was deemed non-compliant as the offer went beyond the reserve price set for the bidding.
For Meralco’s 600-MW requirement, eight companies, including First Gas Power Corp. and First NatGas Power Corp. that sources fuel from Malampaya, expressed interest to submit offers.
The other generation companies are Mariveles Power Generation Corp., Masinloc Power Co. Ltd., GNPower Dinginin and Therma Luzon, Inc., Southwest Luzon Power Generation Corp. and Quezon Power (Philippines) Limited Co.
Results of CSP bidding needs prior approval of the ERC before they are made official.
