An infrastructure think tank on Friday asked the Energy Regulatory Commission to thumb down any emergency power supply agreement in the Manila Electric Co. franchise area which is higher than the rejected San Miguel Corp. and Meralco price proposal of P6.0691 per kilowatt-hour.
Infrawatch PH convenor Terry Ridon said the ERC-rejected price proposal was around 34.8 percent higher than the original 2019 power supply agreement, but the recently lapsed second EPSA with the Aboitiz Group was 89.4 percent higher than the terminated PSA at P8.5250 per kWh.
“To allow the continuation of such exorbitant rates in prospective EPSAs amounts to criminal negligence of the commission’s duty to ensure the least cost of electricity to consumers,” Ridon said.
Meralco executed a second EPSA with Aboitiz-controlled GNPower Dinginin Ltd. for 300 megawatts of baseload capacity covering the period Feb. 3 to Feb. 25, 2023 for P8.5250 per kWh.
This was higher than the first EPSA which carried a fixed price of P5.95 per kilowatt-hour in January. Meralco and GNPower were negotiating for a third EPSA which did not materialize.
“GNPower Dinginin did not offer to extend the emergency supply agreement with Meralco, but Meralco sought other offers from other suppliers and these have been submitted to the DOE [Department of Energy] for its consideration and approval,” Meralco head of utility economics Lawrence Fernandez said.
Ridon said global coal prices had dropped around 60 percent from last year’s highs.
“The rejected price proposal was made at a time of unprecedented coal prices, selling as high as $457.8 per ton. The price of coal today hovers merely at around $180 per ton. As such, any rate higher than the rejected price proposal should be outrightly rejected by the ERC, not only because it their duty to enforce the least cost, but also because the current market environment cannot serve as a basis for higher rates,” Ridon said.
“The commission will effectively facilitate profiteering if it allows generation firms to impose higher rates despite lower operating costs compared to last year’s price fluctuations,” he said.
Ridon reiterated that the public would not accept price proposals higher than the price proposal in the rejected petition.
“If the ERC entertains price proposals significantly higher than the price proposal in the rejected joint petition, it will have failed to ensure the least cost to consumers, which is one of the most fundamental principles in energy regulation,” Ridon said.
“With unabated inflation and stunted incomes, energy regulators should explain to the public how can these elevated rates constitute as the least cost to consumers?” he said.