Resolution deferring Meralco’s power supply bidding filed in Senate

A resolution calling for the postponement of the upcoming bidding for the Manila Electric Company’s (Meralco) 600-megawatt and 400-megawatt power supply requirements has been filed in the Senate.

In a statement, Senator Alan Peter Cayetano said he filed Senate Resolution 1090 on July 29 urging the Senate to call on Meralco to defer its competitive selection process (CSP) “until its terms of reference (TOR) are reviewed to ensure fairness in the selection of bidders and arrive at the true lowest cost for the supply of energy.”

The senator said the power distributor’s TOR remain unclear and may put certain bidders at an advantage at the expense of power suppliers that use indigenous natural gas.

To recall, Cayetano earlier sought for the deferment of Meralco’s CSP for its 600MW base load requirement scheduled on August 2 as he alleged that the TOR for the bidding was discriminatory and effectively disqualified Malampaya-fueled power plants.

In his resolution, the senator said “the Terms of Reference (TOR) of CSP 1 and CSP 2 do not reflect the real preference afforded to indigenous natural gas and its full utilization.”

Further, Cayetano said that the Malampaya indigenous natural gas will be unutilized “if the indigenous natural gas-powered plants are not given a chance to fairly compete in CSP 1 and CSP 2.”

This, he added, is “contrary to the policy and objectives of the EPIRA and Department Order No. 002023-10-0022 of transitioning to a clean energy mix.”

The lawmaker said that “this approach disadvantages indigenous natural gas suppliers by allowing bidders with other energy sources to submit bids with lower fuel costs, only to eventually pass on higher non-fuel commodity costs to consumers.”

“The lack of clarity in the rules regarding TORs in the biddings will result in the underutilization of our indigenous natural gas [and] open the possibility of circumventing the distribution utilities' obligation to supply their captive customers in the least-cost manner,” Cayetano said.

No valid basis to defer

In a separate statement, Meralco Regulatory Management head Jose Ronald Valles said that “none of the prospective bidders, even the generation companies that use the Malampaya gas, raised issues that can be a basis for postponement of the bidding, hence, Meralco has no valid ground to do so.”

The power distributor also emphasized that the CSP for its supply requirements is in accordance with existing rules of Department of Energy (DOE) and Energy Regulatory Commission (ERC), and complies with the EPIRA’s mandate to secure the least-cost supply in an open and transparent manner.

Meralco added that the TORs for the CSPs it previously conducted have secured certificates of conformity from the DOE. 

“Again, any generation company can submit offers for these CSP. While we prioritize power plants using indigenous fuel as required by DOE, we have to ensure that it will not violate our least cost mandate under the law. There is no preferential treatment and Meralco always awards the contracts to the compliant bidder that offered the lowest cost,” said Valles.

Meralco also clarified that Santa Rita and San Lorenzo plants, which use Malampaya natural gas, could not join the earlier 1,800-MW baseload CSP because they are still fully contracted with Meralco on the delivery date of the requirements. 

These plants have no extra capacity that can supply the 1,800-MW requirements of Meralco, according to the power distributor.

It added that San Gabriel, another plant that uses Malampaya gas joined the bidding for 1,200-MW capacity, its offer of P8.45 per kWh is still beyond the reserve price set for that CSP and was therefore non-compliant. 

The offer was just significantly higher than the winning bid of about P7 per kWh. 

“Contrary to some misleading allegations, the TORs for all Meralco CSPs apply to all bidders without discrimination or preferential treatment, and the Reserve Prices, including the bid offers submitted by the bidders are inclusive of all costs, including fuel and fuel-related costs, with no hidden charges,” the company said.

“No costs that were not submitted by the bidder will be allowed as pass-through charges under the PSAs,” it added.—AOL, GMA Integrated News