ERC OKs Meralco and First NatGas’ 414 MW power supply deal


The Energy Regulatory Commission (ERC) has cleared  Manila Electric Co. (Meralco) and a unit of Lopez-led First Gen Corp. to implement their six-year power supply deal covering a baseload power supply of 414 megawatts (MW).

In an order, the ERC granted an interim relief to Meralco and First NatGas Power Corp. to implement their power supply agreement.

This allows both parties to carry out the PSA, which covers a 414-MW supply from San Gabriel combined-cycle gas-fired power plant in Batangas, subject to conditions.

The ERC has approved an effective rate of P3.7121 per kilowatt-hour (kwh), which would result in a decrease in Meralco’s generation cost by P0.0619 per kwh.

Meralco and First NatGas originally requested for a P3.7712 per kwh rate, which would decrease the power distributor’s generation cost by P0.0561 per kwh.

ERC said the final generation cost will still be determined by the commission once it makes its decision on the application.

In 2017, First NatGas made an offer to Meralco, which was subjected to competitive selection process (CSP).

However, Meralco did not receive other counter offers during the two rounds of the price challenge, which made them award the supply contract to First NatGas.

Among these are competitive dependable baseload capacity, an immediate source of replacement power during outages of other baseload plants, and the option for mid-merit supply matched with Meralco’s ramping requirement since San Gabriel has the ability to rapidly ramp up and down upon notice.

Power from San Gabriel is available for purchase by Meralco immediately, as stated under the terms of the PSA. However, the sale of electricity to Meralco will only begin upon ERC’s approval.

The PSA will have a term of six years, or until February 23, 2024, using gas from the Malampaya field, unless otherwise extended by the parties.