Manila Electric Co. warned Tuesday that consumers will shoulder an additional P25.8 billion in power costs if it is forced to secure a new power supply contract to replace San Miguel Corp.’s two power supply agreements.
Meralco said consumers would have to bear an additional P1.6 billion for one month if the supply deals with SMC were terminated and if the utility was forced to buy from the spot market.
The power retailer said in a presentation to the Energy Regulatory Commission that consumers would also need to shell out an additional P12.6 billion if it conducted a competitive selection process for a one-year replacement of the SMC deals and a total of P25.8 billion if the contract covered a period until 2029.
Meralco is looking at a rate of P7.9881 per kWh under the one-year emergency procurement compared to SMC rates of P6.0691 per kWh. The long-term PSA is expected to increase rates to P6.8959 per kWh compared to SMC’s P6.3340 per kWh.
SMC’s rates already include the CIC or change in circumstances claims.
Meralco said it might be forced to immediately procure supply from the Wholesale Electricity Spot Market if the PSAs were terminated or the petitions of SMC were not approved by Oct. 4.
SMC subsidiaries South Premiere Power Corp. and San Miguel Energy Corp., administrators of the 1,200-megawatt Ilijan natural gas and 1,200-MW Sual coal-fired power plants, sought approval from the ERC for temporary relief.
Meralco said SMC’s total rate under its petitions would reach P5.99 per kWh compared to the forecasted WESM rates of P8.9404 per kWh or a difference of P2.9414 per kWh.
“The expected WESM rates are higher by P2.94 per kWh vs. the rates of the SMC PSAs even if the CIC claims are approved. Increase in WESM prices will also affect not only Meralco customers but the entirety of customers in the Luzon/and/or Visayas grids,” Meralco said.
Meralco said initial rate simulations showed that the grant of CIC claims and preservation of PSAs would be more beneficial to Meralco customers and would avoid higher replacement power costs from WESM and/or emergency PSA in the event of PSA termination.
“Considering the forecasted thin supply margin in the coming months, a complete shutdown of the operations of SPPC and SMEC, with a total of 1,000 MW of capacity, if no relief is granted, may compromise supply adequacy and result in brownouts,” Meralco said.
Meralco said the CIC claim could be staggered over six months to mitigate the burden on consumers at P0.28 to P0.29 per kWh.
The company said the grant of the CIC claims and preservation of the PSAs would be compliant with its least cost mandate under the Electric Power Industry Reform Act of 2001, given the circumstances.
Meralco said sourcing from other power suppliers would still result in higher consumer rates based on the scenarios.
