Cusi directs Meralco to secure long-term power supply

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The Department of Energy (DOE) Secretary Alfonso G. Cusi ordered power utility firm Manila Electric Company (Meralco) to ensure that the country has enough power supply in next year’s summer months and in the long term.

“I have written Meralco. I’m asking them on what are their measures to make sure they can cope with the increase in demand – and there is assurance of supply in the summer months and in the coming years,” Cusi was quoted in a Manila Bulletin report.

Cusi mentioned that the DOE is preventing another occurrence of a power system reaching breaking points during the summer months, wherein consumers experience power outages and electricity price increase due to tight supply conditions in the grid.

Increase in electricity demand is both a good and bad situation, Cusi said it is “good” because it means that there’s growth in the economy.

However, Cusi also mentioned that it is a disadvantage as it pushes the  project developers and sponsors to act fast on “building up capacity and that is not easy.”

Power supply-demand problems are to rise again in the Luzon grid by 2022-2023, according to industry forecasts.

As of now, there are still no new projects that could satiate the country’s longer term energy needs.

In terms of Meralco’s competitive selection process (CSP), there is still no specific guidelines on how it can help in new capacity addition.

Cusi reiterated that “we want to promote early construction of power plants,” but those development of power projects are not exactly covered by PSAs at pre-construction phase.

However, project lenders are not eyeing to support new builds because of market risks they are not yet ready to face.

“We want those constructed ahead as merchants to be able to participate in the CSP…we want to encourage power plants to be constructed ahead of time even without PSA,” Cusi said.

The energy department proposed that the terms of reference be relaxed. The PSA solicitation should also include the existing ones; and that capacity should be done in cluster and not just one plant with a specific scale of installation.

 

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