The Energy Regulatory Commission allowed Manila Electric Co. to get power supply amounting to 910 megawatts from the 1,200-MW Ilijan natural gas plant of San Miguel Corp.-subsidiary South Premier Power Corp. at a base rate of P5.9282 per kilowatt-hour.
The ERC issued an order dated May 9, 2024 granting the provisional authority (PA) for the implementation of the power supply agreement (PSA) between Meralco and the winner in the competition selection process (CSP) or bidding.
“The commission noted that the issuance of PA will further protect Meralco’s consumers from exposure to volatile prices in the Wholesale Electricity Spot Market (WESM) and displace volumes contracted by Meralco also from the Ilijan plant at higher prices,” the ERC said.
It said that based on the its simulations, Meralco’s blended generation rate would be lower by P0.2828 per kWh, subject to adjustment after the commission’s deliberation on the PSA’s final authority.
The commission also noted in its evaluation that while Meralco awarded 890 MW to 1,200MW of capacity under the PSA to SPPC, 290 MW is still contracted under an earlier contract [mid-merit supply, ending December 2024] which was previously authorized at the levelized cost of energy rate of P5.136 per kWh.
“Thus, the commission ordered the parties to continue honoring the subsisting contract and lower rate in respect of the 290-MW capacity,” the ERC said.
It also directed the parties to submit proof of compliance with the requirement under the CSP terms of reference.
Meralco and SPPC jointly filed an application with the ERC for approval of the PSA after the San Miguel unit was declared as the winning bidder for its offer of P7.0718 per kWh (total delivered LCOE, VAT inclusive) for 1,200 MW.
The parties said in their filing that given a certain set of assumptions, the annual effective rate under the 2024 Meralco-SPPC PSA is P5.9450 per kWh.
“In fact, by sourcing the capacity through the 2024 Meralco-SPPC PSA, Meralco’s average blended generation rate will be reduced by about P0.4175 per kWh resulting in savings to consumers of about P15.337 billion,” the application read.
