San Miguel bags MERALCO 1,800MW power deals

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San Miguel Corporation (SMC) was the big winner in the Manila Electric Company’s (MERALCO) competitive selection process (CSP), as two of its subsidiaries bagged contracts to supply the power giant’s 1,800-megawatt (MW) supply needs.

Excellent Energy Resources, Inc. (EERI), which proposed to supply MERALCO with 1,200MW from its liquefied natural gas (LNG) power plant, offered the best bid at Php4.1462 per kilowatt hour (kWh).

Meanwhile, sister company Masinloc Power Partners Co. Ltd. (MPPCL), which offered 600MW from its coal-fired put forward a bid Php4.2605/kWh. Both are significantly below the levelized cost of energy reserve (LCOE) price of Php5.2559/kWh.

EERI, which operates in Batangas, and MPPCL, based in Zambales, will be awarded with 20-year power supply agreements (PSAs) that take effect in 2024.

In a report by the Manila Bulletin, SMC President Ramon Ang said that the conglomerate is “just lucky” to have offered the best bids in the power auction.

Another SMC power firm, Mariveles Power Generation Corporation (MPGC) qualified as one of the “possible next best bids” with an offer of Php4.3321/kWh, though it didn’t make the cut for the 1,800MW supply requirement.

Atimonan One Energy Inc. (A1E) and GNPower Dinginin Ltd. Co. (GNPD) had with LCOEs of Php4.6338/kWh and Php5.25/kWh, respectively, while St. Raphael Power Generation Corporation’s (SRPGC) bid of Php5.4426/kWh failed to meet the reserve price.

A1E is a subsidiary of MERALCO PowerGen Corporation, while GNPD is owned by Aboitiz Power Corporation, and SRGPC is controlled by Consunji-led Semirara Mining and Power Corporation.

“The [third party bids and awards committee (TPBAC)] managed the CSP in full compliance with all rules and regulations issued by the [Department of Energy]. The Terms of Reference (TOR) were reviewed and approved by the DOE, and all contracts that will result from the bidding process will be subjected to regulatory proceedings and evaluation by the [Energy Regulatory Commission], ”TPBAC chairman Atty. Ferdinand Domingo said in a statement.

“Pursuant to Section 5 of the Instructions to Prospective Bidders, the aforesaid bidders with the best bids will now undergo post-qualification within seven days from date hereof. Thereafter, the TPBAC shall issue respective notices of award in favor of those who satisfactorily passed post-qualification,” the five-man committee said in the notification of best bids.

“We will continue to work with the energy industry, government and other stakeholders to serve the country’s energy needs. As evidenced in the past, a successful CSP and the resulting PSA signings will result in additional savings and, ultimately, least cost to consumers. In fact, in 2020, MERALCO’s customers experienced a net rate reduction of P1.3870 per kWh, equivalent to bill reduction of more than P277 for a 200 kWh household,” said TPBAC secretariat and MERALCO utility economics head Lawrence Fernandez.

“With this continued downward trend, largely due to these new power supply contracts, MERALCO’s rates today are at their lowest levels in three years,” he continued.

The CSP began with nine bidders, but three were disqualified for various reasons.

“The result is very encouraging. It will definitely bring down rates, which would be to the benefit of our consumers. The CSP is a work in progress, which aims to help achieve electricity tariff levels that are affordable and competitive enough to attract both foreign and local investors to do business in the Philippines,” Energy Sec. Alfonso Cusi said in a separate statement.

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