The Energy Regulatory Commission approved the 15-year power supply agreement (PSA) of Manila Electric Co. and San Miguel Corp.-led Excellent Energy Resources Inc. (EERI), subject to several conditions.
Meralco and EERI signed a PSA covering 1,200 megawatts of baseload capacity during a previously-held competitive selection process.
Meralco awarded EERI the PSA for its offer of P7.1094 per kilowatt-hour in terms of total delivered levelized cost of electricity, VAT inclusive.
EERI will supply Meralco from its 1,275-MW combined cycle power plant in Ilijan, Batangas City. The ERC, however, approved a rate of P6.0038 per kWh for the PSA.
ERC chairperson Monalisa Dimalanta said while many of the conditions of the PSA approval were considered standard, the commission had to add new ones in the wake of the pending acquisition of Meralco’s power arm Meralco PowerGen Corp. (MGen) of a majority stake in Chromite Gas Holdings (CGHI).
CGHI intends to acquire EERI’s newly-constructed 1,300-MW natural gas plant and San Miguel Energy Corp.’s 1,200-MW Ilijan natural gas power plant.
CHGI, together with San Miguel Global Power, will also acquire the LNG import and regasification terminal owned by Linseed Field Corp.
“The other conditions relate to the ongoing review of the Philippine Competition Commission of the proposed changes in the ownership of EERI and the gas terminal. Given that MGen — a Meralco subsidiary— will be a part-owner if the transactions are approved, depending on the action of and conditions imposed by PCC [if any], we may need to revisit compliance with the market share limitations, bilateral contracting limits and requirements on DUs [distribution utilities] engaged in other businesses under EPIRA [Electric Power Industry Reform Act],” Dimalanta said.
The ERC said the parties are subject to a continuing requirement of compliance with the provisions of the EPIRA on market share limitation and DU’s bilateral contracting limits with affiliated entities.
“This final authority is without prejudice to the decision of the Philippine Competition Commission resulting from its ongoing evaluation of the proposed transactions involving the parties, particularly on the changes in the ownership of EERI and the gas terminal facility,” the ERC said.
