MANILA ELECTRIC Co. (Meralco) has received interest from a price challenger to the P3.50 per kilowatt-hour (kWh) quoted by Citicore Power, Inc., which has offered to the distribution utility the output of the solar farms it is developing.
“I don’t know who challenged, but there is a challenge,” said Oscar S. Reyes, Meralco president and chief executive officer, in a chance interview on Tuesday.
Asked about the number of challengers, he said: “Isa lang (Only one).”
Under the rules on competitive selection process (CSP) issued by the Energy Regulatory Commission (ERC), a distribution utility that enters into a power supply agreement (PSA) should first seek challengers to the price offered by a generation company, in this case the two solar farms being developed by Citicore.
Asked whether the challenger has submitted its offered price, Mr. Reyes said: “To my knowledge, dapat na-submit na (it should have been submitted already). Hindi ko lang alam kung na-submit na (I just don’t know if it has indeed been submitted).”
He declined to give an answer when asked about the price offered by the challenger, but said: “It would be lower than P3.50 [per kWh].”
Separately, Meralco Chairman Manuel V. Pangilinan said the declining price of solar energy could only be good for consumers, adding that for the distribution utility the power generation charge, at whatever cost, is simply passed on to electricity users.
He also said declining solar prices could also mean the price of coal power will adjust, and further go down.
“We were thinking as to what total capacity we should build based on coal. I think it’s still needed because it’s cheap… coal prices will adjust. The coal mines would not be put out of business. They’re good for baseload capacities. I think the country should have a mix of energy or fuel sources — coal, renewables, gas,” he said.
He added the declining solar cost would be good for the economy.
“It’s gonna be beneficial for the economy because your disposal income devoted to power is lessened, therefore you can spend more money for whatever, for telephone services, for consumer goods, for your kids, for your tuition,” he said.
Through subsidiaries, Meralco has a pending coal-fired power plant under development that is awaiting regulatory approval for its power supply contract, a requirement demanded by most financial institutions before partly funding a project.
Meralco, the country’s biggest distribution utility with more than six million customer accounts, has also created separate subsidiaries to look into solar projects. It also has joint ventures in run-of-river hydroelectric power projects.
On June 28, Meralco invited solar power developers to challenge the offer made by Citicore as required by the CSP rules.
Citicore offered the output of its three solar power plants, namely: Next Generation Power Technology Corp., First Toledo Solar Energy Corp. and Silay Solar Power, Inc. The plants are in Mariveles, Bataan; Toledo, Cebu and Silay, Negros Occidental.
The price challenge validates pronouncements made by solar power developers that the cost of the energy source is on a continuous decline.
Meralco’s previous two PSAs with separate solar power developers were priced within a range of P4.69 to P5.39 per kWh. The distribution utility is awaiting approval from the ERC for the two separate power supply deals.
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
