The Manila Electric Co. (Meralco) is reviewing San Miguel Corp.’s (SMC) offer to make the full capacity of the 1,200 megawatts (MW) Ilijan natural gas-fired power plant available for the power distributor.
But Meralco said an agreement must first be forged with SMC and First Gen Corp. for the reallocation of power which will need approval by the Department of Energy (DOE) and the Energy Regulatory Commission.
Ramon Ang, SMC president, had said the offer will cost Meralco a minimal P1 per kilowatt hour in capital recovery fee or half of its capital cost on the facility.
Ang said incremental power supply costs from such capacity for households may be cut down significantly compared to prevailing costs from coal power generation.
“They relayed that (offer) to us last Friday and I said I can’t commit because I have to do the rate simulation, the rate impact and up to now we are still running the numbers and the impact on prices to consumers,” said Jose Ronald Valles, Meralco first vice president and head of regulatory management, in a round table discussion in Pasig city on Monday.
Valles added under SMC’s offer, Meralco will look for the fuel supply of the Ilijan plant which may be secured if the DOE and First Gen would agree to re-allocate the latter’s current natural gas supply.
First Gen’s natural gas-fired power plants can run on alternate liquid fuel but is more expensive than traditional natural gas.
“As I understand from (DOE) Secretary Raphael Lotilla, he wants that 1,200 MW to remain operational in the grid so the only way to do it is to source fuel for it. So, you’ll need to divert the fuel of First Gen to Ilijan. Ilijan will run using natural gas and First Gen plants will run on liquid fuel but the liquid fuel has to be a pass-through cost. To us, that could be the mechanics,” Valles said.
Valles added they are “trying to find a way… to facilitate completion of everything” and are optimistic a written agreement may be completed within the week.
In a separate statement, SMC said its subsidiary, San Miguel Global Power (SMGP), notified Meralco it is ceasing supply on its 670 MW power supply agreement effective today, December 7.
The company said it resorted to this move after the Court of Appeals issued a notice of resolution and a temporary restraining order enjoining the ERC and Meralco from implementing the ERC irder denying the joint petition filed by SMGP’s subsidiary South Premier Power Corp. and Meralco for temporary relief for a 60-day period. – Jed Macapagal
