Power retailer Manila Electric Co. and San Miguel Corp.’s power unit Limay Power Inc. are asking the Energy Regulatory Commission to provisionally approve their 400-megawatt power supply agreement (PSA) that would redound to the benefit of consumers.
The parties said in a joint filing the Meralco-LPI PSA has a competitively-procured contract price for interim baseload capacity supply after undergoing competitive selection process or bidding.
They said the contract price is even lower than the recent offers received by Meralco for an interim baseload supply.
LPI owns, operates, manages and maintains the Limay circulating fluidized bed coal-fired thermal power in Barangay Lamao, Limay, Bataan.
“Meralco notes that the delivered rate of P5.6150 per kWh [line rental inclusive and VAT exclusive] is lower by about P2.3151 per kWh than the effective cost of P7.9301 per kWh, if the equivalent capacity under the Meralco-LPI PSA is to be sourced from the Wholesale Electricity Spot Market [WESM],” the filing said.
They said that by sourcing the capacity through the Meralco-LPI PSA, the power retailer’s average blended generation rate would be reduced by about P0.2220 per kWh, resulting in savings to consumers of about P8.1 billion.
“Other features of the Meralco-LPI PSA that shall clearly benefit customers in terms of reliability of supply include no outage allowance, and a guaranteed 100 percent availability of supply, which is crucial in the summer months of 2024,” they said.
They said the PSA capacity is crucial for Meralco’s supply requirement because of the anticipated thinning electricity operating margins in 2024, especially with the upcoming simultaneous scheduled maintenance and possible forced outages of power plants, which will ultimately result in the exposure of its customers to the highly volatile prices of the WESM.