Manila Electric Co. (Meralco) said the delay in the full delivery of the Batangas natural gas plant under its power supply agreement (PSA) with Energy Excellence Resources, Inc (EERI) has nothing to do with the high prices in the Wholesale Electricity Spot Market (WESM).
“The obvious and main cause for high WESM prices is the lack of supply or lack of new capacity in the grid – and this cannot be resolved solely by baselessly blaming Meralco’s PSA with EERI for not being implemented on time,” the company said in a statement on Wednesday.
“Whether the EERI power plant is delayed or not in its commissioning timeline, the issues in EERI’s testing and commissioning would not have much significant effect on the grid’s reliability had there been other new baseload power plants that were already built and online,” it added.
Meralco issued the statement in response to the points raised by Energy Assistant Secretary Mario C. Marasigan during a virtual press briefing on April 14 wherein he noted Meralco’s exposure to WESM since the start of the year.
“We have observed as well that because there is a lack of capacity being delivered, we want to know whether this is the real cause why the exposure of Meralco to the Wholesale Electricity Spot Market from the very start of this year has been more than 20%,” Mr. Marasigan said in mixed Filipino and English.
“So, we know that if that happens, so even other distribution utilities that are also sourcing power supply from the Wholesale Electricity Spot Market are indirectly affected because if many are buying in the limited capacity, then prices go up,” he added.
WESM is the trading floor of electricity where energy companies can buy power when their long-term contracted power supply is insufficient for customer needs.
EERI and Meralco signed a power supply deal resulting from the competitive selection process (CSP) conducted last year. The power generator offered 1,200 megawatts (MW) of capacity coming from its 1,275-MW combined cycle power project in Ilijan, Batangas.
However, not all EERI units are currently operational. EERI earlier said in a statement that the target to address and resolve concerns is by May 30.
“Our concern is without the fulfilment of the power supply agreement (PSA) of Meralco and EERI, then there is a gap. Instead of having a fully contracted capacity, then these capacities that are lacking under the PSA will have to be sourced from other generating facilities,” said Mr. Marasigan.
Meralco said that the high WESM prices cited by Mr. Marasigan are “due largely to the simultaneous outages of several power plants, rather than the delayed implementation of Meralco’s PSA with EERI.”
“In case there is an unexcused delay in the implementation of the PSA because the commercial operation date has not occurred as scheduled, Meralco made sure that its customers are still completely protected,” the company said.
Meanwhile, Meralco also said that its 1,800-MW CSP conducted last year and the resulting PSAs complied with all government policies for the procurement of power for its captive customers.
Except for exigent circumstances, Meralco said that it only sources power for its captive customers through CSP based on its power supply procurement plan approved by the Department of Energy.
“Notwithstanding, Meralco wishes to reiterate its commitment to provide continuous and reliable service to all its customers especially during the summer months of this year when it is expected that demand in electricity will increase,” the company said.
Mr. Marasigan declined BusinessWorld’s request for comment, saying that he has yet to read Meralco’s statement.
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. — Sheldeen Joy Talavera
