ERC approves termination of San Miguel-MERALCO PSAs


The Energy Regulatory Commission (ERC) has given the green light to terminate two power supply agreements (PSAs) involving power units owned by San Miguel Corporation and Manila Electric Co. (MERALCO), with a combined capacity of 1,800 megawatts (MW).

The ERC’s approval of the PSA terminations will enable MERALCO to move forward with a competitive selection process (CSP) for its power supply needs.

In a report by the Philippine Star, ERC chairperson Monalisa Dimalanta said that they have granted the request for the “withdrawal of the application.”

In March, San Miguel Global Power issued notices of termination for its PSAs with Meralco, which covered 1,200 MW and 600 MW.

Initially, the termination was based on the PSAs’ longstop date having lapsed. Dimalanta revealed that MERALCOhad made efforts to extend the agreements but was unsuccessful.

MERALCO intends to rebid a 1,800-MW supply contract after San Miguel withdrew its supply deals, initially aimed at providing electricity by 2024 and 2025. These contracts were initially signed with San Miguel units Excellent Energy Resources Inc. and Masinloc Power Partners Co. Ltd. in 2021.

MERALCO first vice president and head of regulatory management,  Jose Ronald Valles, stated that the company was awaiting ERC approval to proceed with the CSP for the 1,800-MW requirement starting next year. The terms of reference are ready for publication once the ERC approval is obtained.

On the terminated contracts, Dimalanta emphasized that MERALCO must adhere to the new CSP guidelines issued by the ERC on October 6, should they decide to proceed with the CSP for the 1,800-MW capacity.

The CSP guidelines govern the power supply contracting of distribution utilities (DUs). It involves selecting a power supplier through transparent and competitive bidding to obtain the lowest-cost power for consumers.

The ERC emphasized that the CSP guidelines are crucial to ensuring transparency, accountability, and competitiveness in the power supply sector for the captive market of DUs.