MANILA Electric Co. (Meralco) is finalizing supply agreements to partially replace the 670 megawatts (MW) of lost capacity under a terminated contract with SMC Global Power Holdings Corp.

“We have already accepted offers. Right now, we are in the process of finalizing the agreements with the generators,” Jose Ronald V. Valles, Meralco’s first vice-president and head of its regulatory management, told reporters on the sidelines of the Philippine Electric Power Industry Forum 2023 in Manila on Monday.

The capacity was supposed to be delivered by SMC Global Power unit South Premiere Power Corp. (SPPC) under a power supply agreement (PSA) with Meralco that was agreed upon in 2019.

The 10-year deal at P4.2455 per kilowatt-hour (kWh) was indefinitely suspended after the appellate court granted in January an injunction sought by the power arm of San Miguel Corp. (SMC).

“[For] the 2019 PSA, we have received offers from GNPD (GNPower Dinginin Ltd. Co.) for 300 MW and 370 MW from SMC, but that is only for one year,” Mr. Valles said.

He said the offer has an average price of P7.80 per kWh and will take effect on March 26.

“I cannot say the exact amount but this is a fuel pass-through,” Mr. Valles said, referring to rates that are subject to adjustment based on the price of fuel.

Aboitiz Power Corp.’s GNPD previously supplied Meralco with a 300-MW capacity through an emergency power supply agreement (EPSA) forged on Dec. 15, 2022 until Jan. 25, 2023 at a rate of P5.96 per kWh. The contracting parties agreed on a second EPSA, which was secured on Feb. 3 to last until Feb. 25.

The second EPSA has a full fuel pass-through structure with an implemented rate of P8.53 per kWh.

Last year, SMC Global Power sought a temporary rate increase, jointly filed with Meralco, saying that SPPC and another unit San Miguel Energy Corp. incurred a combined loss of P15 billion. The rate increase was meant to recover part or P5 billion of the units’ losses.

The company cited a “change in circumstance” when surging fuel costs breached the price range contemplated during the execution of the contracts with Meralco. However, the Energy Regulatory Commission (ERC) denied the petition, saying this had no basis as the PSA is a fixed-rate contract.

Meanwhile, Mr. Valles said that Meralco is confident that it will get a supplier after SMC Global Power terminated two more PSAs with Meralco. He could not say whether a re-bid would result in higher prices since new terms of reference will be needed.

“We don’t know the parameters to determine the price,” he said.

Last week, Meralco announced that two subsidiaries of SMC Global Power — Excellent Energy Resources, Inc. (EERI) and Masinloc Power Partners Co. Ltd. (MPPCL) — notified the power distributor that they had terminated their PSAs.

EERI proposed to supply capacity from its natural gas-fired power plant starting in 2024 for P4.1462 per kWh, while MPPCL offered 600 MW from its coal-fired power plant for P4.2605 per kWh by 2025.

ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta told reporters on Monday that SMC Global Power’s move will not have an immediate impact on electricity prices but said the pressing concern is power supply.

She confirmed that the PSA application went past the date during which it should have been approved by the ERC. But she said the agency will also check whether SMC failed to submit pending requirements that prevented immediate approval.

“The real concern is on the security of supply next year. Of course, rate is an issue, but the real concern now is supply — whether or not we can get a replacement,” she said.

“We’re waiting for their (Meralco) filing. When they informed us on Friday, they said they will file the proper motion today (Monday). We are expecting that they will file something today once we receive that, we will evaluate the basis for termination,” she added.

On Monday, Meralco told the stock exchange that under the terms of the newly terminated contracts, the termination will be effective after the lapse of 15 days from receipt of the notice, or on April 1.

On the stock exchange, Meralco shares rose by five pesos or 1.64% to close at P309 each.

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 an interest in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose