Updated (March 7) – GNPower Dinginin Ltd. Co. (GNPD), a joint venture of Aboitiz Power Corp. and the Ayala group, is supplying 300 megawatta (MW) capacity to the Manila Electric Co. (MERALCO) at Php 8.5250 per kilowatt-hour (kWh).
In a report by the Manila Bulletin, MERALCO said that the emergency power supply agreement (EPSA) from January 26 to February 25, 2023, is roughly double the Php 4.31 per kWh billed by the South Premiere Corporation (SPPC).
The extended supply rate is also more expensive than the initial Php 5.95 per kWh during the first EPSA began supplying to MERALCO in December.
MERALCO first vice president and head of regulatory management Jose Ronald Valles said that they only signed for 300 MW, a partial replacement of the 670 MW of the Iljan plant that was subject to the injunction of the Court of Appeals.
Valles explained that the capacity from Aboitiz did not go through a bid process as the “contract we signed with GNDP is covered by a certificate of exemption issued by the Department of Energy. We have certificate of exemption for up to 670 MW.”
When asked by the rate offer is higher than the Php 7.71 per kWh average settlement price in the Wholesale Electricity Spot Market (WESM) during the Malampaya maintenance shutdown last February 4 to 18, Valles said that “when we signed this contract, we have our own forecast of the WESM prices. Our guideline is that, if the offered tariff is lower than our forecast of the WESM, then we will sign the contract.”
The MERALCO official also noted that the Php 5.95 per kWh charge in December was based on a fixed price contract, while the extension contract warrants full pass-through of the fuel costs.
Valles further explained that the rate comparison employed in the EPSA extension had been between GNDP and WESM, “since there were no other suppliers willing to supply to MERALCO for that period.”
Prior to signing the EPSA extension with GNDP, Valles said their “forecast of WESM price was higher than GNPD’s offered tariff since there was a scheduled Malampaya outage in February, and there was insufficient capacity in the grid due to the non-operating status of Ilijan 1200 MW plant.”
Whether AboitizPower had adjusted the rates high due to possible incurred losses in the first offer of Php5.95 per kWh contract, Valles said that they can only assume that has been the situation, “that’s the reason why they adjusted their offer for a full fuel pass-through right after the Php5.95 per kWh offer in December.”
In a separate statement, GNPD said that the price of the second EPSA includes “line rental costs and value-added tax (VAT). “This is in contrast to other cited prices which are the plain cost of power, without additional costs such as VAT and other charges.”
When the final bill is sent, Valles said that “the actual rate may be different depending on their actual fuel costs and forex (foreign exchange) in February supply month,” also taking into account that WESM prices appeared to have ended lower versus forecasts.
The Energy Regulatory Commission (ERC) has yet to approve the adjusted rate for the capacity supplied by the Dinginin plant.
The ERC denied SMC Global Power Holdings Corp. (SMCGP) and MERALCO’s joint price hike petition on two of its power supply agreements (PSAs) amid high global oil prices and natural gas supply restrictions.