ERC junks 3 Meralco power agreements
Credit to Author: JORDEENE B. LAGARE| Date: Wed, 28 Aug 2019 17:27:24 +0000
THE Energy Regulatory Commission (ERC) has dropped the power deals of Manila Electric Co. (Meralco) with three entities following a Supreme Court (SC) ruling mandating firms to subject such agreements to public bidding.
The agency granted the joint urgent motion to withdraw the joint application filed by Meralco and Atimonan One Energy Inc. (A1E), Meralco and Redondo Peninsula Energy Inc., and Meralco and Global Luzon Energy Development Corp. in separate orders dated Aug. 13, 2019.
Section 4, Rule 7 of the Commission’s Rules of Practice and Procedure allows an entity to withdraw its application, petition or complaint lodged before the ERC, provided that they indicate the reasons for doing so.
The entities lodged their petition for withdrawal after the High Court ruled that all PSA applications submitted to the ERC on or before June 30, 2015 must undergo a competitive selection process (CSP) in compliance with Department Circular DC2018-02-003, issued by the Department of Energy last year.
CSP is designed to protect consumers. Rules under them require distribution utilities to get at least two offers for power supply before awarding a deal, ensuring that consumers get the least cost.
Meralco’s three PSAs are part of the 99 deals invalidated by the SC earlier.
Prior to the ERC orders, Meralco commenced the CSP for three supply contracts: the 10-year contract for a 1,200-megawatt (MW) supply from a baseload plant, 20-year contract for a 1,200-MW supply from another baseload plant, and five-year contract for a 500-MW supply from a mid-merit facility.
The listed power distributor received 23 expressions of interest from several entities, including those of AboitizPower for the three supply deals with a total capacity of 2,900 MW.
On May 3, 2019, the High Tribunal promulgated its decision on the petition lodged by Alyansa Para sa Bagong Pilipinas Inc. in 2016.
The ERC earlier filed a motion for reconsideration to reverse the SC verdict on the grounds that all companies except Meralco were not party to the case. However, the
High Court later affirmed with the finality that the CSP applies to all power supply deals.
With 11-2 votes, with one abstention, the SC said in its June 23, 2019 ruling that the majority of the SC en banc voted to deny the motions for reconsideration filed by the ERC and the power utilities.
Earlier this month, ERC Chairman and Chief Executive Officer Agnes Devanadera said they had sought clarification from the High Tribunal, as this would disrupt the power supply to some 13 million customers across the country.
In particular, this would halt the delivery of electricity services to 52 DUs serving 13 million customers in the country — 9.371 million from Luzon, 1.767 million from Visayas, and 1.978 million from Mindanao.
When that happens, the regulator argued a total of 743 MW would have to be sourced from the electricity spot market, particularly 370 MW in Luzon, 86 MW in Visayas, and 287 MW in Mindanao. This might prompt an increase in the generation charge.