Group urges ERC to deny Meralco power deals; Meralco says claims ‘baseless’

Advocacy group Power for People (P4P) Coalition has filed a petition to the Energy Regulatory Commission (ERC) seeking to reject Manila Electric Company’s (Meralco) supply contracts with fossil fuel-fired power generation companies, which it claimed will lead to higher electricity costs for consumers.

“We are asking the ERC to 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,” P4P convenor Gerry Arances said in a statement on Tuesday.

In particular, P4P is seeking for the ERC to thumb down power supply deals with Excellent Energy Resources Inc., GNPower Dinginin, Southern Power Premiere Corporation, and Mariveles Power Generation Corporation.

The recently forged contracts, subject to approval by the ERC, would account to about 3,000 megawatts (MW) or 3 gigawatts of power supply from the four fossil fuel generation firms, which are led by giants San Miguel Corp. and AboitizPower.

“The terms of these power contracts are unfavorable to consumers and small businesses. Everyone loses except big power players: Meralco, San Miguel, and Aboitiz, who are leaving consumers no choice but to pay for more expensive electricity while their profits are soaring,” Arances said.

Sought for comment, ERC chairman Monalisa Dimalanta said the regulator is still evaluating the power supply deals of Meralco.

“We thank Power for People Coalition for raising their concerns with ERC at this stage. We are still in the process of evaluating the Meralco PSAs and the points raised by consumer groups will all be taken into consideration. We encourage consumers to also participate in the formal process — as intervenors or oppositors in the proceedings — so we can ventilate all issues,” Dimalanta said.

Arances claimed that Meralco’s contracts “allow the plants to automatically pass on fuel costs to consumers, which is against the ‘least-cost’ provision of the Electric Power Industry Reform Act (EPIRA).”

P4P said its petition also raised alleged “conflict of interest” as Meralco’s power generation arm announced in March a joint venture with Aboitiz to buy into two San Miguel-owned gas assets to develop a massive liquefied natural gas (LNG) facility in Batangas City.

The two projects, the Ilijan gas plant under Southern Power Premiere Corporation (SPPC) and the under-construction Excellent Energy Resources Inc. (EERI) plant, both clinched 1.2-GW contracts each, according to the consumer group.

In a separate statement, Meralco said the claims made by P4P against its power supply deals are “baseless.”

“Meralco is committed to sourcing the least-cost available supply through, among others, the conduct of a transparent competitive selection process (CSP),” said Meralco spokesperson Joe Zaldarriaga.

“We strictly observe and follow the requirements and standards set by the government, which includes securing prior approval from the Department of Energy (DOE) of our Power Supply Procurement Plan and the corresponding Terms of Reference (TOR) of the CSPs. In addition, these TORs also considered suggestions of the Energy Regulatory Commission (ERC) Chairperson before they were published,” said Zaldarriaga.

The power distributor official explained that the bidding for the supply involving 1,200MW baseload requirement was awarded to South Premiere Power Corp. after it submitted the lowest bid of P7.0718 per kWh.

Zaldarriaga said SPPC bested the P7.1006 per kWh offer of the joint venture of Limay Power Inc. and San Roque Hydropower Inc. for 150MW capacity; as well as First Natgas Power Corp.’s bid of P8.4489 per kWh which was deemed non-compliant as the offer went beyond the reserve price set for the bidding.

For the other 1,800 MW supply, the Meralco official said the company secured the best bids from three generation companies, namely GNPower Dinginin Co. Ltd., Mariveles Power Generation Corporation, and Excellent Energy Resources Inc. as the companies offered P6.8580 per kWh (300 MW), P6.9971 per kWh (300MW), and P7.1094 per kWh (1,200MW), respectively.

“The CSPs involve an open and competitive process with the ultimate goal to secure the lowest bid from qualified generation companies, with no preferential treatment. Thus, the allegations that contracts emanating from CSPs are anti-competitive have no basis,” said Zaldarriaga.

“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 added. —RF, GMA Integrated News