The Manila Electric Co. (Meralco) debunked allegations by consumer groups the power supply contracts it signed with four power plants utilizing fossil fuel are “unfavorable” to consumers.
The Power for People Coalition (P4P) et al filed a petition to the Energy Regulatory Commission (ERC) seeking to deny the 3,000-megawatt power supply contracts of Meralco, saying these will result in more expensive electricity for consumers.
Earlier this year, Meralco initiated a bidding process that awarded the said volume of power supply contract to power plants owned by San Miguel Corp. and Aboitiz Power.
P4P said the contracts allow the plants to automatically pass on fuel costs to consumers which the group says is against the least-cost provision of the Electric Power Industry Reform Act.
But Meralco said the least-cost available supply was secured through among others, the conduct of a competitive selection process (CSP).
“We strictly observe and follow the requirements and standards set by the government, which includes securing prior approval from the Department of Energy of our Power Supply Procurement Plan and the corresponding terms of reference (TOR) of the CSPs,” said Joe Zaldarriaga, Meralco vice president and head of corporate communications, in a statement.
Zaldarriaga added the TORs also considered suggestions of the ERC chairperson before being published and undergoing an open and competitive process to secure the lowest bid from qualified generation companies.
The petition also raised the question of conflict of interest in the bidding process for two specific plants after Meralco’s power generation arm announced last month a joint venture with Aboitiz to buy into two San Miguel-owned gas assets to develop a liquefied natural gas facility in Batangas City.
Meralco said the CSP involving 1,200 MW baseload PSA was awarded to South Premiere Power Corp. after it submitted the lowest bid of P7.0718 per kilowatt hour (kWh).
The 1,800 MW CSP was secured from three generation companies: GNPower Dinginin Co. Ltd. at P6.8580 per kWh for 300 MW; Mariveles Power Generation Corp. at P6.9971 per kWh for 300 MW; and Excellent Energy Resources Inc. at P7.1094 per kWh for 1,200 MW.
“We would like to assure our customers that all power supply contracts resulting from our CSPs undergo a strict review and approval from the ERC before being implemented to ensure that rates are fair and reasonable,” Zaldarriaga said.
The groups also argued terms of the contracts are anti-competitive as it deliberately keeps out renewable energy projects from entering.
“The terms of reference of the contracts set energy requirements, technical parameters and minimum capacity offers that clearly favor big fossil fuel players. That’s already too many red flags for the ERC to ignore,” said Aaron Pedrosa, Sanlakas secretary general, in a statement.
Gerry Arances, P4P convenor, said the ERC must “reject these contracts as part of their responsibility of protecting the public.”
“Otherwise, they will condemn a new generation of consumers to 15 years or more of expensive power,” Arances added.
