House probe sought over MERALCO’s expensive power purchase

quezon power station

Several partylist congressmen want the House of Representatives to investigate the Manila Electric Company (MERALCO) for allegedly purchasing electricity at a high price from a coal-fired power plant in Mauban, Quezon.

Bayan Muna Reps. Carlos Zarate, Eufemia Cullamat, and Ferdinand Gaite filed House Resolution No. 1350 to probe the high power generation rates charged by the Quezon Power Philippines Ltd. (QPPL), which owns the Quezon Power Station.

The resolution states that based on analysis of the power giant’s purchases for 2019, QPPL has had the most expensive coal power rate in the country since 2000. The three representatives further pointed out that QPPL’s rates are 9-12% higher than that of other coal plants.

The 460-megawatt coal plant, has been in operation since 2000 via a 25-power purchase agreement and transmission line agreement with MERALCO, the country’s largest electricity distributor.

The resolution further noted that the utility giant’s generation charge went down by 16% from Php4.9039 per kilowatt hour (kWh) in January 2020 to Php4.1241/kWh in August 2020.

The reduction was attributed to MERALCO’s negotiations with independent power producers to “declare a situation of force majeure during the COVID-19 pandemic, wherein the take or pay provisions of the contracts were not applied. In turn, this generated savings for customers of around Php1.5 billion.

Further analysis from Bayan Muna and consumer group Matuwid na Singil sa Kuryente stresses the price of coal used by coal plants fell by 28% from $69.66 in January to $50.34 in August, and that prices at the Wholesale Electricity Spot Market price fell by 193% from Php8.49 per kWh in January to only Php2.421 per kWh in August.

For the first nine months of 2020, the utility giant allegedly bought 1.601 billion kWh of electricity from QPPL at an average of P6.73 per kWh, while the average price of all other coal power suppliers to Meralco for that period is about P4.20 per kwh, the solons said.

They stressed this was 51% higher than AC Energy’s Php4.55, 66% higher than San Miguel’s Sual Power Plant’s Php4.051, 82% higher than Therma Power’s Pagbilao plant’s Php3.6549 per kWh, and 66% higher than the rates of the new 460 megawatt San Buenaventura coal plant at Php4.0533 per kWh.


Photo from Quezon Power Philippines Ltd. website.