Manila Electric Company

Meralco rates highest in asia

AN enraged consumer group has slammed the new power rate hike of the Manila Electric Company (Meralco) for March and April.

Alyansa Para sa Bagong Pilipinas Secretary General Aya Jallorina said Meralco could not hide its abuse and opportunism anymore since its power rate is the highest in Asia.

Meralco announced the additional P0.85 per kWh in power rate this March and the additional P0.12 per kWh in April.

 “Sobra na, tama na ang dagdag-singil sa kuryente na patuloy na nagpapahirap sa publiko,” said Jallorina.

ABP alleged that aside from the still unexplained power rate adjustment, overcharging among others, the power distribution firm is reportedly involved in a “power cartel” since it allegedly managed to manipulate the cost of power supply in the country.

An example is the “sweetheart deal” Meralco allegedly entered into to purchase electricity from seven independent power products which include the Redondo Peninsula Energy, Inc. (RPE), Atimonan One Energy, Inc. (A1E), St. Raphael Power Generation Corp. (SRPGC), Central Luzon Premiere Power Corp. (CLPPC), Mariveles Power Generation Corp. (MPGC), Panay Energy Devt. Corp. (PEDC) and Global Luzon Energy Devt. Corp. (GLEDC).
Research conducted by ABP showed that the Meralco PowerGen Corporation has “significant shares” in the seven power plants. The firm is a corporation of Meralco involved in the setting up of power plants in different parts of the Philippines.
The ABP claimed that there is a clear indication that Meralco is involved in a power cartel because it would buy electricity from plants which it owns or has “significant shares” in.
“There is power cartel sa atin ngayon, kasi itong Meralco PowerGen is actually Meralco, sister company sila. Although allowed ang cross-ownership, itong Meralco PowerGen ay mayroong up to 80 percent shares or ownership, na dapat ay hanggang 60 percent lang sa mga power generation company kung saan bumibili ng electricity supply ang Meralco,” said Jallorina.
Jallorina added that according to some power industry sources, there are major local investors who are willing to participate in the energy sector, especially if it becomes a priority of the government.
To end the alleged monopoly of Meralco, ABP urged the Duterte administration to open the energy sector to other players or companies like what it did with the local telecoms sector.
Jallorina believes that if other companies would be allowed to compete with Meralco, the primary beneficiaries would be the Filipino citizens as they would be given choices as to what power distribution company renders efficient services and offers lower and reasonable power rates.
“Sa ilang taon na kasing nakalipas hanggang sa ngayon ay wala tayong magawa kundi magbayad na lamang kung ano ang nakalagay sa ating monthly Meralco electricity bill. Hindi na natin inaalam kung tama ang sinisingil sa atin, kung nadadaya ba tayo o ano pa. Basta bayad lang kasi tayo, sapagkat ayaw nating maputulan ng kuryente ang bahay o negosyo natin,” said a dismayed Jallorina.


House panels clear Meralco to forge power supply contracts in Luzon

THE Committees on Energy and the Good Government and Public Accountability of the House of Representatives paved the way for the Manila Electric Company (Meralco) to enter into power supply agreements (PSAs) with seven affiliate companies.

“It is hereby resolved the ERC must immediately resolve the seven PSA applications of Meralco, provided all the requirement prescribed by laws, rules and regulations have been complied with, and the appropriate hearings on the applications have been conducted,” according to Committee Report 632 based on House Resolution 1741 authored by Minority Leader Danilo Suarez.

The ERC is the Energyy Regulatory Commission.

“These [seven]PSAs respond to the infrastructure development thrust of this administration and are expected to reduce the transmission congestion in Luzon that causes intermittent power outages that consequently interrupt business activities and dampen economic growth,” the same report said.

The resolution refers to Meralco’s pending PSAs with Redondo Peninsula Energy Inc., Atimonan One Energy, Inc., St. Raphael Power Generation Corporation, Central Luzon Premiere Power Corporation, Mariveles Power Generation Corporation, Panay Energy Development Corporation and Global Luzon Energy Development Corporation.

The seven PSAs are expected to provide 3,551 megawatts to Luzon.

“The existing coal-fired power plants are outdated and insufficient, rendering them vulnerable to transmission failures that may be caused by disasters such as the recent earthquake in Samar and Leyte,” the committee report said.


Meralco’s $3-B power project given ‘pioneer’ perks

The US$3.0-billion Atimonan coal-fired project of the power generation investment arm of Manila Electric Company (Meralco) had been granted pioneer incentives by the Board of Investments (BOI), a top company executive has announced in a briefing with reporters.

Meralco PowerGen Corporation President Rogelio L. Singson said the project was “given the pioneer status because we are the first ultra super-critical 2×600 megawatt facility in the country.”

As a project of pioneer status, the 1,200MW Atimonan plant will be bestowed longer income tax holiday (ITH) of at least six years, plus it shall be able to enjoy suite of tax perks and other non-fiscal incentives.

The Atimonan power plant venture is a “shovel ready” project, but the award of its engineering, procurement and construction (EPC) contract cannot be consummated yet following regulatory snag on the approval of its power supply agreement.

The fate of the Atimonan project, relative to delays on go-signal of the Energy Regulatory Commission (ERC) on its supply deal, is a parallel stumbling block being suffered by the company’s other 600-megawatt power plant project in Subic.

Singson said they had just lost the initial EPC contract signed with South Korean firm Daelim Industrial Co. Ltd. – a deal that should have been cheaper than what they ought to negotiate anew given the tender re-submission of the prospective contractor.

“Unfortunately without the PSA, the contractor said we cannot continue honoring the extended EPC contract,” Singson stressed.

He added that Daelim had to submit a new contract, with Singson emphasizing that “they did submit this April…we have people from Daelim sitting down with our technical people who are just looking over the new EPC price proposal.”

Singson qualified though that the cost of the new EPC contract is “way much higher than the extended contract.” Notably, Meralco first negotiated the EPC contract for the Redondo Peninsula power project in Subic way back in 2012; then when it had fallen due, it was stretched until December last year.
“Keep in mind that the EPC contract of RPE was already on an extended term. That should have lapsed in 2016, but we’re able to get an extension until December, 2017 for some escalation provision,” the Meralco PowerGen chief executive has reiterated.

On the Swiss challenge for the PSAs of the two projects as propounded by the Department of Energy (DOE), Singson opined that as in any government policy, any application of such must be done prospectively – and shall not cover projects that had already gone through prevailing policy processes.
“We’re hoping that the implementing rules which are being discussed right now for CSP (competitive selection process) for Swiss challenge, when adopted by the ERC and DOE, will be used prospectively,” he stressed.

Singson added “we are just hopeful that they realize that for example, Atimonan, we’ve gone through the full process…the prescribed process adopted by the ERC.”

The CSP is an auction system to institutionalize transparency in the procurement of power supply by the distribution utilities, the likes of Meralco and the electric cooperatives.


Meralco sets additional P70-B capital investment

As its parent firm, Manila Electric Company (Meralco) will be rolling out up to P70 billion worth of capital spending for projects that will chiefly reinforce its distribution network and other ventures it will be engaging in at the utility segment of the business, according to company president and chief executive officer Oscar S. Reyes.

He noted that the next batch of capital expenditures will be for its next regulatory reset in 2019 to 2023; with him emphasizing that average capital outlay on a two-year period is estimated at P35 billion.

“If you extrapolate, that will be P70 billion for four years,” Reyes said, although he emphasized that the capital needs of their distribution network will depend on eventual load growth being served by their system.

That level of spending is almost parallel to the P73 billion that the company had budgeted over regulatory years July 2015 to June, 2019.

The next round of investments will go along with the 50-year corporate life extension (starting May 7, 2019) that the company has approved on its annual stockholders meeting on Tuesday (May 29).

Meralco chairman Manuel V. Pangilinan said the extended corporate life has yet to be filed with the Securities and Exchange Commission (SEC) and subject to the approval of the company’s stockholders.

On the power generation front, Meralco and its power generation subsidiary are eyeing several brownfield and greenfield assets – including possible buy into the 50-percent thermal capacity of the Ayala group.

When asked on that particular prospect, Pangilinan indicated that the company’s interest is “ocean deep”, but he has not elaborated as to which numbers they have been looking at.

Meralco PowerGen President and CEO Rogelio L. Singson further asserted that he had already seen the numbers, but he cannot further comment “because we have non-disclosure agreement.”

Singson has been more forthright though on the company’s targeted investments on the solar space – to the tune of 500 to 600 megawatts of capacity into years 2021-2022. “In the next 3 to 4 years at least 500 to 600MW (of solar). It should be at least 20 to 30-percent of the portfolio of MGen,” he stressed.

Given the intermittent nature of solar, the MGen chief executive further noted that battery storage will be the ‘coupling technology’ that they shall be leaning on – primarily the prospective partnership deal they have been pursuing with Japanese multinational conglomerate Hitachi Ltd.

“We’re hoping that battery will come into play within the next five years. We’re seriously looking at development in battery,” Singson asserted.

At this stage though, he emphasized that the “cost proposition” for battery is still comparatively expensive and the capacities still at relatively smaller magnitude. “It is still in the development stage as far as battery is concerned. They’re still very small capacities, the biggest being in the order of just 2.0 megawatts,” he said.

Meralco-First NatGas power supply deal gets ERC go signal

THE Energy Regulatory Commission (ERC) has granted Manila Electric Co. (Meralco) and First NatGas Power Corp. (FNPC) the authority to implement their power supply agreement (PSA) in an “interim relief” that sets certain conditions.

“In the event that the final rate is higher than that granted in the interim, the resulting additional charges shall be collected by FNPC from MERALCO. On the other hand, if the final rate is lower than that granted in the interim, the amount corresponding to the reduction shall be refunded by FNPC to MERALCO,” the ERC said in its order.

In March, Lopez-led First Gen Corp. said its unit had entered into a power supply contract with distribution utility Meralco for the sale and purchase of around 414-megawatts (MW) of baseload capacity.

With the PSA, First Gen said Meralco had secured “competitively priced” baseload electricity, or steady 24/7 power, since its plant’s all-in tariff at an 80% capacity factor is P3.77 per kilowatt-hour.

The power will be sourced from FNPC’s already constructed and currently operational San Gabriel combined cycle natural gas-fired power plant within the First Gen Clean Energy Complex in Batangas City.

The term of the PSA is six years using gas from the Malampaya field, but, in the event that liquefied natural gas (LNG) becomes available, the term of the PSA could be extended upon mutual agreement with Meralco, First Gen said.

In their joint application in March, Meralco and FNPC said the timely implementation of the PSA would best serve the interest of electricity consumers.

They said the simulated delivered price of P3.8637 per kWh provides for a lower cost of power compared to the simulated effective cost at the wholesale electricity spot market (WESM) of P4.4405 per kWh.

Compared with the simulated effective cost at the spot market, the two companies said capacity and corresponding net electrical output from the existing San Gabriel plant at the contract price can reduce Meralco’s cost.

Any delay in the implementation of the PSA would translate into foregone savings of about P0.0561 per kWh and missed economic opportunities for Meralco’s captive customers, the two firms said.

The ERC order came after Meralco filed an urgent motion for issuance of provisional authority in April alleging that the supply condition in the market is tight, “gravely affecting the prices” at the WESM.

Meralco said it was projecting a capacity deficit in its portfolio because of the expected high demand and the possible occurrences of outages.

Based on its distribution development plan, Meralco said its aggregate demand from 2018 to 2023 is expected to grow by a compounded average rate of 4.13%.

Last May 29, Meralco and FNPC filed a joint motion for issuance of provisional authority, which repeated the same allegations in the distribution utility’s filing in April. FNPC’s natural gas-fired power plant has been operating since January 2018.

In its order, the ERC said the applicants have satisfied the substantial requirements for the grant of interim relief. Based on its rules of practice and procedure, the agency may act on applications with or without hearing based on allegations, supporting documents and evidences presented by the applicants.

The PSA between Meralco and FNPC was forged after the power utility invited price challengers in December 2017, which resulted without any challenger submitting qualification documents. A second round of invitation came out with no qualified price challenger, prompting the award to FNPC.


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