Meralco files application to source 55 MW of capacity from Toledo Power and Panay Power for summer months

By Juzel L. Danganan

MANILA, Jan. 11 (PNA) — The Manila Electric Company (Meralco) has filed an application with the Energy Regulatory Commission (ERC) to source 55 Megawatts (MW) of capacity from Toledo Power Corporation (TPC) and Panay Power Corporation (PPC) for the projected Luzon reserve deficit during summer.

It was filed by Meralco, but will be joined by Toledo Power Corporation and Panay Power Corporation as co-applicants, which have a 40 MW diesel power plant in Cebu and a 72 MW diesel power plant in Iloilo. TPC and PPC will file another petition, joining Meralco’s request.

In the application, the distribution utility shown in a chart will receive 55 MW of capacity from TPC and PPC during Monday to Saturday from 10:00 a.m. to 9 p.m.

Meralco said the contract price with TPC for the capacity costs Php 10.84 per kilowatthour (kWh), while its effective capacity delivered price amounts in Feb to Php 11.54.

Moreover, it said the contract price with PPC amounts to Php 10.82 per kWh, adding that the delivered capacity price costs Php 11.93 per kWh.

The distribution utility deal with TPC and PPC is much cheaper than Wholesale Electricity Spot Market (WESM) rates, bringing in generation charge savings of Php 0.03 and Php .02 per kWh, respectively.

Under the deal, TPC and PPC will pay WESM costs, benefits to host communities charges, VAT brought by the business of the power supplier, while Meralco will pay VAT on contract energy, WESM line rental charges for the electricity flow to Meralco’s node and the National Grid Corporation of the Philippines’ transmission charges.

The petition notes the right and obligations of the parties begin when the Energy Regulatory Commission (ERC) approves the petition, but notes the agreement is effective after the signing and will expire on July 25, 2015.

Meralco urges the ERC to approve the petition immediately, so it will not be forced to source from WESM during the volatile pricing that comes with the summer months.

”Consequently, if the Interim Power Supply Agreements (IPSAs) are not implemented during the period when the reserve capacity will be below the required contingency reserves, MERALCO will be constrained to source from the WESM, where prices are volatile, especially during the summer months of 2015,” it said.

The company stressed the approval is critical to reliable electricity supply and reasonable prices for its consumers during the summer months, expected from the scheduled maintenance shutdowns and forced outages of major coal and gas-fired power plants in Luzon. (PNA)