THE Energy Regulatory Commission (ERC) said over the weekend it approved an interim extension of the power purchase agreement between Manila Electric Co. and First Gas Power Corp. until Jan. 31, 2026, to prevent potential power outages.
The extension of the agreement for the 1,000-megawatt Santa Rita power plant in Batangas was subject to certain conditions, it said. The previous agreement was set to expire on Aug. 28, 2025.
The regulator said First Gas would likely be forced to shut down the plant without the extension, a scenario that could lead to “widespread blackouts” that would “severely impact the national economy.”
The ERC said the extension may cause an increase in Meralco’s blended generation charges, but that the rate impact would be significantly more severe if the plant’s capacity became unavailable.
Meralco’s blended generation rates would increase by P0.4117 per kilowatt-hour (kWh) in September, P0.5235 per kWh in October and P0.5093 per kWh in November, the ERC said.
Market simulations showed spot market prices would increase to as high as P6.23 per kWh if the Santa Rita plant operated as a merchant plant, compared with P3.08 per kWh with the PPA in place.
Among the conditions set by the ERC are a minimum dispatch of the Santa Rita power plant and the use of the previously approved rate, which is equivalent to or computed at an 83-percent plant capacity factor.
The ERC also directed Meralco to comply with its contractual obligations under power supply agreements with other generation companies and to nominate all its contracted capacities in a manner that would yield the lowest-cost supply to its captive market.
The regulator said the Department of Energy had also said there was no legal impediment to the extension of the Santa Rita PPA and that it was not covered by a competitive selection process requirement.
