THE Energy Regulatory Commission (ERC) has approved Manila Electric Co.’s (Meralco) application to withdraw its power supply agreements (PSA) with three power generating companies after the Supreme Court ordered them to first go through competitive bidding before forging the deals.

In separate orders promulgated on Aug. 23, 2019, the agency approved Meralco’s three withdrawal applications, which it applied jointly with Global Luzon Energy Development Corp., Redondo Peninsula Energy, Inc. (RP Energy), and Atimonan One Energy, Inc. (A1E).

The ERC order provides closure to Meralco’s plan to move forward the development of the new energy sources by entities that it is affiliated with. The proposed power plant projects are supposed to meet the power distribution utility’s future requirement.

“In view of the Supreme Court decision cited by [Meralco] and A1E as the ground relied upon for their withdrawal, the Commission hereby grants the withdrawal of applicants’ joint application,” the commission’s order states.

The ERC similarly phrased its order for the two other companies. The applications to withdraw the PSA applications were filed on June 14, 2019.

A1E is the project company of Meralco subsidiary Meralco PowerGen Corp. (MGen). It is building a two-unit ultra supercritical coal-fired power plant, each with a capacity of 600 megawatts (MW) in Atimonan, Quezon province.

MGen is also behind RP Energy, which is building a two-unit power plant, each with a capacity of 300 MW using the circulating fluidized bed technology.

Meralco forged the PSAs with the entities and jointly filed with their application for ERC approval on April 29, 2016. Hearings were conducted on Nov. 14, 2016, Nov. 28, 2016, and March 6, 2017 for the determination of compliance with the jurisdictional requirements, expository presentation, pre-trial conference, among others.

The withdrawal of the applications came after the Supreme Court on May 3, 2019 granted the petition of Alyansa Para sa Bagong Pilipinas, Inc. (ABP) to disapprove the PSAs and implement the competitive selection process (CSP). The process is meant to reach the least-cost power for consumers.

The court decision required all PSAs submitted by distribution utilities to the ERC on or after June 30, 2015 to comply with the CSP as called for by Department of Energy (DoE) Circular No. DC2018-02-003.

“Thus, in the light of the said Supreme Court Decision on the ABP Petition, applicants are constrained to move for the withdrawal of the instant Joint Application,” Meralco said in its application.

After the court ruling, Meralco has since invited bidders keen on supplying energy to the utility under three separate notices and to be conducted under a CSP as called for by the DoE circular.

For power supply from the “brownfield” power plant, or one that is already existing, Meralco sought 1,200 MW starting on Dec. 26, 2019 up to Dec. 25, 2029. The submission of bids is until Sept. 9, 2019.

For the mid-merit power, which can be supplied by power plants with ability to adjust its power output as demand for electricity fluctuates throughout the day, Meralco sought 500 MW under a five-year contract. The bid submission is until Sept. 11, 2019.

Meralco also sought bids for another 1,200 MW with a target commercial operation date by March 2024 for the first unit, and full contract capacity by September 2024. In case a power plant has four units, two of them must attain commercial operation date by March 2024. The bidder must offer fuel source from high efficiency, low emission technology.

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

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