The Energy Regulatory Commission (ERC) has ordered Manila Electric Company (Meralco) and First Gas Power Corporation (FGPC) to submit additional data and explanations regarding their request for an interim extension of their Power Purchase Agreement (PPA).

In a joint manifestation and motion filed on August 22, the two companies sought ERC approval for the interim extension of their Power Purchase Agreement (PPA).

ERC required Meralco and FGPC to explain whether the extension would not result in excess contracted capacity, provide a simulation of its impact on generation charges, and submit details on how they plan to utilize or dispatch their contracted plants, specifically the Sta. Rita facility. The regulator gave them three days to file their explanation electronically and five working days to submit printed copies in compliance with Resolution No. 09, Series of 2020.

The application relates to the 1,100-megawatt (MW) Sta. Rita natural gas power plant in Batangas, which has been supplying electricity to Meralco under a 25-year PPA since it began full commercial operations in August 2000. The contract is scheduled to expire at the end of this month. FGPC had previously sought an extension of the supply agreement for up to 15 years.

First Gas Power Corporation, a subsidiary of First Gen Corporation, owns and operates the Sta. Rita facility. First Gen currently operates four gas-fired power plants with a combined capacity of 2,017 MW, contributing to its total generation portfolio of 3,668 MW across renewable energy sources.

The ERC said it will closely monitor strict compliance with its directives as it evaluates the proposed supply contract extension and its impact on consumers.

What safeguards should regulators enforce to ensure interim power supply deals are cost-effective and beneficial to the public?

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