Power retailer Manila Electric Co. issued a bidding notice for the 10-year supply of 1,200 megawatts starting Dec. 26 this year in compliance with the government’s competitive selection process.
The published invitation to bid is one of the three Meralco scheduled pursuant to the Energy Department’s Circular No. DC 2018-02-0003, which requires distribution utilities and electric cooperatives to conduct public bidding in the procurement of their supply.
“Two more are scheduled to be initiated next week,” Meralco head of utility economics Lawrence Fernandez said.
Meralco’s third-party bids and awards committee invited all interested and qualified parties to participate in the competitive bidding for the supply of 1,200 MW of electricity.
Meralco is seeking bids for 1,200 MW with supply starting Dec. 26, 2019 up to Dec. 25, 2029. Supply should come from a baseload (firm and dispatchable) power plant or single or portfolio of plants.
Meralco, however, has the sole discretion and option to annually reduce contract capacity by up to 600 MW from Dec. 26, 2023 to Dece. 25, 2025
“The contracted capacity and associated energy may be reduced equivalent to the reduction in the demand of captive customers of Meralco by reason of the implementation of retail competition and open access, the Renewable Energy Law or other laws and legal requirements,” the company said in its published invitation to bid.
The power retailer said the minimum capacity offer per bidder should be 200 MW.
“To constitute a valid bidding process, the total minimum offered capacity received from interested bidders should be at least 1,000 MW. If the bidders’ total offered capacity fail to meet the pay-as-bid minimum as at the expression of interest deadline or the opening of the technical proposals, it shall result in a failed bidding,” it said.
Meralco said the bidders should guarantee the 100-percent availability (no outage allowance) of supply during the period.
“In case power supplier fails to provide the supply of power from its nominated power plant or portfolio of plants, WESM [Wholesale Electricity Spot Market] or any other source, power supplier shall pay a fine equivalent to P908 multiplied by each MWh during a day, which shall be used to reduce the generation charge to the consumers,” it said.
Interested bids can submit expressions of interest until 4 p.m. on July 26 while a pre-bid conference would be held at 9 a.m. to 12 noon on Aug. 8.
Meralco set the bid submission deadline on or before 9 a.m. of Sept. 9.
The company earlier committed to Energy Secretary Alfonso Cusi that it would comply with the CSP for up to 2,000 MW of their capacity following the decision of the Supreme Court.
“I had a meeting with Meralco and we prepared the timeframe and the roadmap that there is an urgency to do a CSP on the two power plants—Atimonan and Redondo, I think. That has to be subjected to CSP already,” Cusi said earlier.
Meralco earlier signed power supply agreements with seven generators in April 2016 to secure 3,551 MW of capacity needed in its franchise area which became the subject of the Supreme Court case.
The SC ruled that all PSAs submitted by distribution utilities to ERC on or after June 30, 2015 including those of Meralco should undergo CSP, a form of competitive public bidding for the purchase of electricity by DUs.
The energy chief said the SC ruling was expected to usher in a new era in power procurement, “an era of true competition, where all deserving power suppliers with efficient technologies, low rates, and fair contract terms are welcomed into the market.”
Cusi said Meralco needed to conduct the CSP to ensure that there would be adequate power supply to meet the country’s economic growth.
“We need that for our capacity building. That’s what we are doing. We are giving priority now to capacity building… With the improving economy, the growing economy, the demand for electricity is growing. People are consuming more because they want a better life,” he said.