Philippines: Meralco defends power supply deals

Philippines: Meralco defends power supply deals

Manila Electric Co. (Meralco) said its seven power supply deals will provide
adequate and least cost supply to consumers and support the massive
infrastructure program of the Duterte administration.

Meralco first vice president and legal and corporate governance head William
Pamintuan said building more power plants in a timely manner is critical to
sustain the growth trajectory of the Philippine economy and promote
inclusive growth.

This will also "ensure the country's energy security especially as we
support the 'Build Build Build' agenda of President Duterte," he said.

"At the end of the day, we need power if we want to build. Otherwise,
economic growth cannot be supported or sustained. The Luzon power crisis in
the early 1990s, and the Mindanao power crisis in 2012 are testaments to the
pernicious effect that widespread and extended power outages wreaks to our
economy and our people as businesses close down and unemployment goes up,"
Pamintuan said.

He was responding to allegations the power supply agreements (PSAs) pending
before the Energy Regulatory Commission (ERC) are midnight contracts and
will result in costlier and dirtier energy from coal.

Pamintuan said the PSAs were legally filed in accordance with the rules and
regulations of the ERC with the objective of ensuring adequate and reliable
power supply at least cost to Meralco's more than six million customers.

"Each of these PSAs had undergone a very rigorous, lengthy and, at times,
contentious negotiation process with the generation companies which actually
took many months and years before the agreements were signed and filed with
the ERC," he said.

Citing one case, negotiation for one PSA started in 2012 and was concluded
only in 2016.

"Meralco negotiated the PSAs in utmost good faith and the resulting rates
and other terms and conditions that were filed before the ERC are very
competitive and favorable to the consumers," Pamintuan said.

The PSAs involve a supply of 3,551 MW, which corner 81 percent of the
combined output of the seven power plants, most of which are owned or partly
owned by Meralco through its power generating unit Meralco PowerGen Corp.
(MGen).

The applications were submitted to the ERC on April 29, 2016, just a day
before the new effectivity date of the competitive selection process (CSP)
policy requiring distribution utilities to undertake competitive bidding to
secure PSAs with generation companies.

Originally, the deadline to comply with the CSP policy was scheduled on Nov.
6, 2015 but the ERC decided to defer the implementation following
clarifications from stakeholders.

During a congressional hearing yesterday, ERC OIC Alfredo Non said the
extension was not to give undue advantage to Meralco.

He said the extension was to accommodate applications of a number of power
companies still undergoing negotiations for power supply deals.

Apart from Meralco, there are more than 90 PSAs filed by different
distribution utilities and electric cooperatives ahead of the CSP deadline,
Pamintuan said.

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Link to Original Article:
https://mtnvnews.com/meralco-defends-power-supply-deals/117156/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com