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ERC grants provisional authority for Meralco-First Gen Hydro power supply agreement

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THE Energy Regulatory Commission (ERC) has recently granted provisional authority to Manila Electric Co. (Meralco) and First Gen Hydro Power Corp. (FGHPC) to implement their power supply agreement (PSA).

In a Jan. 8 order, the ERC said that both firms must adhere to the applicable rate of P4.2366 per kilowatt-hour (kWh) regardless of plant capacity factor, which measures how often a plant runs at maximum capacity. The agency also said that the rate would be “subject to any escalation,” which could see the rate moving up.

“Meralco is hereby directed to efficiently utilize the contracted capacity from FGHPC bearing in mind its obligation to supply at least cost,” the ERC said in its order.

The ERC added it would determine the final rate in its final resolution of Meralco and FGHPC’s joint application.

The commission said Meralco must use the “best available rate” in the market when it computes for the optimum blended generation rates. ERC also ordered the utility giant to justify its proposed plant capacity factor, and explain in writing the inconsistencies of its data on the average daily load curve, and supply-demand scenario.

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The order was based on a 2019 joint application filed by Meralco and FGHPC, which sought the ERC’s approval of their supply agreement.

In November, the ERC granted FGHPC’s motion for reconsideration, which the firm filed in June. The ERC said in its Nov. 11 order that the applicable rate is at P5.1908 kWh, which would be subject to escalation.

Three years ago, the Lopez-led First Gen Corp. said that its unit had entered into a power supply contract with the power distribution company for the sale and purchase of 414 megawatts of baseload capacity.

The power would be sourced from First NatGas Power Corp.’s San Gabriel combined cycle natural gas-fired power plant in Batangas City. The San Gabriel plant started delivering power to the Luzon grid in November 2016.

On Thursday, Meralco shares inched down by 1.69% to end at P292.75 apiece. Meanwhile, First Gen shares shed 1.22% to close at P31.50 each. — Angelica Y. Yang

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