No choice but WESM for Meralco, for now

THE Manila Electric Company (Meralco) will start sourcing from the Wholesale Electricity Spot Market (WESM) the 670-megawatt (MW) capacity covered by its power supply agreement (PSA) with South Premiere Power Corporation (SPPC) that was covered by a Court of Appeals-issued Temporary Restraining Order (TRO).

On Wednesday evening, the utility firm said, “starting tomorrow, January 26, Meralco will source from the WESM.”

The contract capacity of SPPC was partially replaced by Meralco’s 300-MW emergency PSA (EPSA) with Aboitiz-led GNPower Dinginin Ltd. (GNPD), which expired on January 25.  Meralco had asked GNPD to extend the term of the EPSA, but Meralco did not receive an offer for an extension.

“No offer from them,” Meralco First Vice President Jose Ronald Valles confirmed in a text message at 5 p.m.

Aboitiz confirmed the end of the 30-day EPSA with Meralco.

Under the EPSA, the 300MW power was derived from the new 1,336MW GNPower Dinginin Plant in Mariveles, Bataan with a fixed price of P5.95 per kilowatt hour.

“We remain grateful for the opportunity to contribute to the delivery of a much-needed energy supply covering the Meralco franchise. In the event that Meralco launches another competitive selection process [CSP], where the terms of reference will be reasonable, Aboitiz Power will certainly participate,” Aboitiz said.

Valles said the expired EPSA lessened Meralco’s exposure to the WESM and, in turn, partly shielded its customers from volatile and potentially higher generation costs. “[Meralco] has no other choice but WESM,” added Valles.

Meralco is also closely working with the Department of Energy (DOE) and all relevant industry players to ensure adequate supply and protect its customers from volatile and higher WESM prices.

As early as December 2022, Meralco started the CSP for additional 480-MW supply starting February of this year.

Meralco assured customers that it exhausts all measures to continue delivering stable and reliable electricity at the least cost under the current circumstances.

SPPC halted the power supply to Meralco after the CA issued the TRO on their PSA.

Meralco then asked SPPC to pay the price difference between the contract price and the WESM price, to which Meralco would be exposed during the effectivity of the TRO.

The claims, Meralco added, will be on top of all applicable fines, penalties, and liquidated damages under the PSA in the event that the CA eventually resolves the main case and denies the Petition of SPPC.

Meralco said it has been exhausting all efforts to protect customers from potentially higher generation costs, while ensuring continuity of stable, reliable, and least cost power under the current circumstances.

Earlier, the Energy Regulatory Commission rejected the petition of SPPC and Meralco to increase generation charges due to higher costs of coal and natural gas, noting that the agreed price in the PSA is fixed and the causes cited by the companies were not factors for price adjustments.

Image credits: Roy Domingo