Philippines: Meralco evaluating low bid from solar supplier

Philippines: Meralco evaluating low bid from solar supplier

MANILA ELECTRIC Co. (Meralco) has received an offer for power supply at a
cost lower than the P5.39 per kilowatt-hour (kWh) quoted by a solar farm in
September for which the utility sought price challengers.

Oscar S. Reyes, Meralco president and chief executive officer, confirmed
that the company had received a counter-offer challenging the proposal of
PowerSource First Bulacan Solar, Inc.

"We're still evaluating. We'll probably complete the evaluation [this]
week," he told reporters when asked about the outcome of the distribution
utility's price challenge invitation on the sidelines of First Gen Corp.'s
Avion and San Gabriel plant launch last Friday.

Meralco on Sept. 23 put out an advertisement calling on power generation
companies to challenge the offers of PowerSource and Solar Philippines
Tanauan Corp. for the utility's solar power supply agreements (PSAs). It set
the submission deadline on Nov. 7, 2016.

"Technically we can do another price challenge," Mr. Reyes said, referring
to another round for Solar Philippines' unchallenged offer, also at P5.39
per kWh.

Distribution utilities are required by the Energy Regulatory Commission
(ERC) to subject power supply offers to a competitive selection process
(CSP) to ensure that they agree to the least costly deals from generation
companies. Generation charges are pass-through costs that are billed monthly
to consumers.

"We'll look at the entire package," Mr. Reyes said, when asked about the
parameters to be used in evaluating the counter-offers.

He declined to disclose the offer given by the challenger ahead of the
proposed second round for Solar Philippines. He said the new round would
avoid possible questions about the selection process.

"We're still trying to determine what's best," he said, adding that Meralco
was looking at "various things" other than pricing in evaluating the offers,
including the solar companies' track record, capability and reliability.

PowerSource and Solar Philippines' offered price is P3.3-per-kWh lower than
the second round of guaranteed feed-in-tariff (FiT) of P8.69 for every kWh
they export to the grid for 20 years, which the Department of Energy (DoE)
set for qualified solar developers.

Solar Philippines is offering to supply 50 megawatts (MW) for 20 years from
the solar power plants it is developing in Tanauan, Batangas and in Naic,
Cavite and their surrounding areas, or an alternative site embedded within
Meralco's franchise area. The first site is expected to operate in February
2017 while the second is to start two months later.

PowerSource's offered supply of 50 MW will come from its proposed solar farm
in Barangay Labne in San Miguel, Bulacan. Like Solar Philippines it is open
to an alternative site embedded within Meralco's franchise area. The
contract period is 20 years to start in August 2018.

Meralco previously said that adding the 100 MW to its portfolio would
benefit the entire generation cost. If a deal is closed, it would be the
utility's first supply contract for the renewable energy. The company
received the supply offers after the DoE's 500-MW installation target was
reached in a "first to build, first to FiT" race that ended on March 15,
2016.

Without any announcement from the DoE of a third round of guaranteed FiT,
solar developers are left to contracting their output with distribution
utilities, or by trading it in the spot market for electricity.

Meralco's controlling stakeholder, Beacon Electric Asset Holdings, Inc., is
partly owned by Philippine Long Distance Telephone Co. (PLDT). 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.

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Link to Original Article:
http://www.bworldonline.com/content.php?section=Economy&title=meralco-evalua
ting-low-bid-from-solar-supplier&id=136277

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com