“It is crucial to continue supporting and champion processes like the CSP”
The recent Competitive Selection Process conducted by Meralco for a 600-megawatt baseload supply represents a significant milestone in the effort to secure affordable and reliable electricity for consumers.
As accredited observers representing consumer advocacy CitizenWatch Philippines we witnessed how this government-mandated process continues to provide transparency, competition, and ultimately, the lowest electricity rates for the public.
In this CSP, which attracted eight power generation companies, six firms submitted their bids.
The most competitive offers came from Masinloc Power Co. Ltd., which proposed a rate of P5.6015 per kilowatt-hour (kWh) for 500 MW of supply, and GNPower Dinginin Ltd. Co., offering a rate of P5.7392 per kWh for the remaining 100 MW.
These rates, both inclusive of line rental and value-added tax, are significantly lower than the reserve price of P7.2609 per kWh set for the bidding.
For consumers, the successful outcome of this CSP translates into the prospect of lower electricity rates in the future.
Currently, some electricity suppliers, charge over P7 per kWh, excluding VAT.
This marked difference between current rates and the rates secured through the CSP underscores the process’s effectiveness in driving down costs for consumers.
The potential savings are substantial and will benefit households and businesses once the power supply agreements (PSAs) are implemented.
The success of the CSP can be attributed to its structured and transparent approach. As a mechanism mandated by the Department of Energy and the Energy Regulatory Commission, the CSP process requires strict adherence to rules that ensure fairness and integrity.
The presence of consumer groups, other Civil Society Organizations and even environmental groups along with public access through live streaming, further reinforces transparency.
The value of this CSP lies not just in the immediate cost savings, but also in its broader impact on energy security.
By locking in fixed rates through 15-year contracts, it minimizes the risk of exposure to price fluctuations in the electricity spot market.
This is particularly relevant given the volatile nature of energy prices, both domestically and globally.
With the 600-MW baseload supply secured, consumers can expect a more predictable electricity cost, a welcome development in a time of economic uncertainty.
What makes this CSP even more significant is its timing.
With rising inflation and increasing costs of basic commodities, electricity prices have a significant impact on the financial burden faced by Filipino consumers.
A recent Pulse Asia survey revealed that 72 percent of Filipinos consider controlling inflation as the top issue to be addressed.
By securing lower rates for electricity, the CSP helps mitigate some of the financial pressures on households and businesses, offering a buffer against the rising cost of living.
The broader implication of these CSPs is that they represent an effective strategy for managing one of the country’s most pressing challenges—affordable and reliable electricity supply.
As the economy continues to recover from the effects of the global pandemic, ensuring energy security at competitive rates is crucial to sustaining economic momentum and attracting investment.
Meralco’s CSPs are a critical component of this effort, helping to protect consumers from volatile market conditions while contributing to the government’s energy security goals.
Looking ahead, the success of this CSP has also sparked significant interest in the upcoming CSP for a 400-MW supply scheduled for Oct. 1, 2024.
Six power generation firms, including First Gas Power Corporation, GNPower Dinginin Ltd. Co., and Masinloc Power Co. Ltd., have already expressed interest in participating.
Their participation indicates continued confidence in the CSP process as a mechanism for securing cost-effective power contracts.
The results of this 400-MW CSP could further bolster the effort to lower electricity rates, which is critically important as the country continues to face economic headwinds.
The success of Meralco’s 600-MW CSP and the upcoming 400-MW CSP reflect the power of transparent, competitive mechanisms in delivering meaningful benefits to consumers. Lower electricity rates not only provide immediate relief to households but also support broader economic stability and growth.
As we move forward, it is crucial to continue supporting and champion processes like the CSP, which not only protect consumer interests but also strengthen the nation’s energy security.
Every initiative aimed at reducing costs and improving reliability contributes to a stable economic path—one that requires the collective effort of the whole society and ensures shared benefits for all.
