MANILA Electric Co. (Meralco) will call for bidders to supply 1,200 megawatts (MW) of energy capacity by using one set of terms for new power plants and a different one for existing facilities, going against the suggestion of the Department of Energy (DoE) to open the competitive selection process (CSP) without such distinction, its president said.
“We’ve considered the DoE proposal and are minded basically to proceed on the basis of what we have set out originally, which is to differentiate the brownfield [existing power plants] from the greenfield [new power projects],” Ray C. Espinosa, Meralco president and chief executive officer, told reporters.
He said the power distribution company is scheduled to publish the terms within the week for the second round of competitive bidding for its energy requirement.
“There are financial and economic differences between brownfield and greenfield plants,” he said, referring to respectively to existing plants and new ones.
“PSAs (power supply agreements) that are awarded to these types of plants vary and differ [in their] financial and economic terms,” he added.
Mr. Espinosa said a major difference between the two is that greenfield plants contract their generated power through a 20-year PSA to allow the investing company to recover its capital outlay.
“[For] brownfield, it’s a very different template. The PSA typically runs from five to 10 years as demonstrated by the successful CSPs we have conducted,” he said.
On Sept. 11, Meralco held a competitive bidding for 500 MW of mid-merit capacity effective Dec. 26, 2019 for a term of five years. The winning bidders are First Gen Hydro Power Corp. for a contract capacity of 100 MW, Phinma Energy Corp. for 110 MW, and South Premiere Power Corp. for 290 MW.
They signed the PSA on Sept. 16 subject to regulatory proceedings and evaluation by the Energy Regulatory Commission.
Earlier on Sept. 13, Meralco also signed 1,200 MW of baseload capacity. Phinma Energy will supply Meralco with 200 MW, while San Miguel Energy Corp. and South Premiere will deliver 330 MW and 670 MW, respectively. The 10-year contract will run from Dec. 26, 2019 to Dec. 25, 2029.
“What we have to clarify is what is being regulated by the DoE is the process — that the CSP has to follow certain guidelines to ensure it is transparent, it is truly competitive and basically attain its objective of securing supply at the least cost,” Mr. Espinosa said.
The first round of competitive bidding for the 1,200 MW was for supply by a greenfield power plant. It was declared as a failed bid.
“But it does not mean there will be no potential bidders again especially since we have also relaxed some of the requirements,” Mr. Espinosa said.
The relaxed requirements include breaking down the plant configuration to 150-MW units from the previous blocks of 600 MW. A power plant can therefore have 150-MW units and go all the way up to 1,200 MW.
“We have done that, and that was in response with the comment made by SMC (San Miguel Corp.) when we signed the CSP,” he said, referring to the group behind South Premiere.
“We have also moved away from single location requirement, basically allowing multiple requirements, again to make sure those who are willing to bid for a 1,200-MW greenfield have the ability to put up these plants in multiple locations,” Mr. Espinosa said.
He said what Meralco is trying to emphasize to the DoE is that all the comments the company had received from prospective bidders during the pre-bid conference up to the awarding of power supply contracts had been addressed.
“We feel that our position is reasonable and that we basically have the basis upon which to go for a second round of CSP for the 1,200 MW,” he said.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Victor V. Saulon
