Meralco gets ERC approval to source 64 MW of additional power

MANILA, Philippines – Regulators have allowed Manila Electric Company (Meralco) to source up to 64 megawatts (MW) of additional capacity from Interim Bilateral Supply Agreements (IPSA) with the units of Global Business Power Corporation (GBPC).

“The Commission (Energy Regulatory Commission) finds that the approval and implementation of the subject Interim Power Supply Agreements (IPSAs) will be beneficial to Meralco’s customers by way of reliable, continuous and efficient supply of power within its franchise area at reasonable costs,” said the ERC in its 49-page decision released last week.

The utility firm had sought ERC’s approval to source up to 37 MW from Toledo Power Co. (TPC) and 27MW from Panay Power Corporation (PPC).

TPC owns the 40MW diesel-fired power plant in Toledo City, Cebu while PPc owns the The 72MW diesel-fired power plant in La Paz, Iloilo City. 

The IPSAs are meant to mitigate exposure to the Wholesale Electricity Spot Market (WESM) until July when reserve capacity will be below the required contingency reserves.

This is expected to happen due to scheduled maintenance shutdowns and forced outages of major base load coal-and gas-fired power plants in Luzon, based on data from the National Grid Corporation of The Philippines (NGCP)

“The simulated delivered price in Meralco and PPC’s IPSA, upon consideration of the interim mitigating measure in the WESM (Wholesale Electricity Spot Market), would result to an overall savings of P0.0170/kWh (kilowatt hour) for the period of March 2015 to July 2015,” said the ERC.

The IPSA between Meralco and TPC will result in overall savings of P0.0213 per kWh.

If these IPSAs are not implemented, Meralco would be forced to source from the WESM, where prices are volatile, especially during March to July this year.

This would likely result in higher WESM prices in light of the very tight supply under thin reserve margin conditions during the said period.

The IPSAs, Meralco said, will ensure continuous and reliable electricity at reasonable prices for Meralco customers during the critical period until July this year. – Rappler.com