Meralco to negotiate lower rate for new emergency power supply deal
MANILA Electric Co. (Meralco) said it is negotiating with Aboitiz Power Corp. to forge another 300-megawatt emergency power supply agreement (EPSA) for one month.
“We have also requested GNPD (GNPower Dinginin Ltd. Co.) for an extension of another one month but we are trying to negotiate a lower price,” Jose Ronald V. Valles, Meralco’s first vice-president and head of its regulatory management, said in a virtual briefing on Monday.
Meralco’s previous EPSA with AboitizPower’s GNPD ran from Feb. 3 to 25, the second time the power distributor forged an emergency deal with the power generation company.
Last year, Meralco secured an EPSA with AboitizPower for P5.96 per kilowatt-hour (kWh) from Dec. 15, 2022 until Jan. 25, 2023. Its EPSA with GNPD covering most of February was not a fixed-rate contract.
Mr. Valles said its second EPSA with GNPD is a full fuel pass-through with an implemented rate of P8.53 per kWh, but subject to change due to foreign exchange adjustments and the actual fuel cost.
“That is the price implemented but the price would actually change depending on the actual fuel price that would be billed by Dinginin (GNPD) to us,” Mr. Valles said.
In a Viber message, a representative of AboitizPower declined to comment on the status of the negotiation, saying that the company deferred to Meralco to do the announcement.
“As they are the contract holder… this will be a new contract, not an extension of the last one,” the AboitizPower representative added.
Meralco’s move to secure an EPSA came after its power deal with South Premiere Power Corp. (SPPC), the administrator of the gas-fired power plant in Ilijan, Batangas, was subjected to a writ of preliminary injunction issued by the Court of Appeals (CA).
The 670-MW contracted capacity is supposed to be covered by Meralco’s power supply agreement (PSA) with SPPC, which was agreed upon in 2019 for a period of 10 years at P4.2455 per kWh. However, the deal was indefinitely suspended after the injunction issued by the appellate court in January.
Last month, the 13th division of the CA granted the writ of preliminary injunction sought by SMC Global Power Holdings Corp., the power arm of San Miguel Corp., in favor of SPPC.
The CA decision indefinitely suspended the power supply deal of SPPC with Meralco and ordered both parties to renegotiate their PSA.
“Yes, we are in discussion with SPPC. We are sending them a letter in compliance with the directive of [the] Court of Appeals for us to enter into a good faith negotiation to try to settle the case,” Mr. Valles said.
In 2022, SMC Global Power sought a temporary rate increase, jointly filed with Meralco, saying that SPPC and another unit San Miguel Energy Corp. incurred a combined loss of P15 billion. The rate increase was meant to recover part or P5 billion of the units’ losses.
The company cited a “change in circumstance” when surging fuel costs breached the price range contemplated during the execution of the contracts with Meralco. However, the Energy Regulatory Commission denied the petition, saying this had no basis as the PSA is a fixed-rate contract.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose