The Energy Regulatory Commission (ERC) yesterday allowed Meralco and GNPower Dinginin Ltd. Co. (GNPD) to implement a 15-year power supply agreement (PSA) covering 100 megawatts (MW) starting today (August 26).
In a statement, the regulatory body said it adopted the proposed total base fee of P2.3055 per kilowatt-hour (kWh), which may still be adjusted based on the final decision of the ERC on the partnership, for purposes of interim relief.
ERC said it authorized Meralco and GNPD to proceed with the implementation of their PSA, which was first pursued in September 2024 following a competitive selection process (CSP).
Under the CSP, a distribution utility (DU) may only sign a PSA with a generation company after calling for and receiving at least two qualified bids from generation companies. The DU will only be allowed to have direct negotiations with other power suppliers after at least two failed bidding procedures.
“The commission considered several parameters in granting the provisional relief, including compliance with the Department of Energy’s CSP rules and the ERC’s CSP Guidelines, the supply-demand scenario, the PSA’s salient features, bid price, and the PSA rate,” the ERC explained.
The regulatory body added that, based on its assessment of the evidence submitted by the parties, it found merit in allowing the parties to implement their PSA pending the issuance of the final decision in the case.
“Granting this interim relief enables vital power supply agreements to proceed, while we continue to exercise due diligence before issuing a final ruling,” ERC chair Francis Saturnino Juan explained.
He added that the move “balances” consumer protection with the need for a stable and competitively priced electricity supply.
Meanwhile, in a separate order, the ERC asked Meralco and First Gas Power Corp. (FGPC) to explain whether their requested extension of contract will not result in excess contracted capacity for the DU.
The ERC said the parties must also provide a simulation of the impact of the requested contract extension on generation charges.
Last May, FGPC sought the approval of the ERC for the extension of its power purchase agreement (PPA) with Meralco covering a 1,000 MW capacity from the Santa Rita natural gas-fired power plant in Batangas.
FGPC said then that the PPA may be extended without the conduct of a CSP, pursuant to Article 2.2 of the PPA that was signed with Meralco on January 9, 1997.
The company defended then that the extension of the contract would not require the conduct of a CSP as the PPA was approved years before the move was first required by the Department of Energy and mandated by the Supreme Court in 2019.
The court ruling required all DUs to conduct a CSP for PSAs filed on or after June 30, 2015, to ensure transparent, competitive, and least-cost electricity procurement for the benefit of consumers.
