THE Manila Electric Company (Meralco) accepted last Thursday three “best bids” to meet its five-year requirement for a 500-megawatt peaking capacity – the bids of First Gen Hydropower Corp. of the Lopez Group, the Phinma Energy Corp. of the Ayala Group, and the South Premier Power Corp. of the San Miguel Energy Group. The bids will now go through a post-qualification process, then the signing of agreements that will be filed with the Energy Regulatory Commission for approval.
With these peaking-capacity procurements, Meralco said estimated savings for its consumes will be around P4.4 billion over the five-year period of the contracts, equivalent to a rate reduction of around P0.13 per kilowatt-hour for consumers starting December 26, 2019. In tandem with an earlier 1,200-MW sourcing, the total cost savings to consumers will be P13.86 billion a year, redounding to a rate reduction of P0.42 per kilowatt-hour.
Meralco has been undertaking a competitive selection process through public bidding for power supply in the coming years. A bidding last week for 1,200 megawatts was declared a “failure of bidding” when two of its targeted bidders withdrew and another interested party did not appear. But Thursday’s bidding proceeded without a hitch.
There had been an attempt by Bayan Muna to stop the bidding set by Meralco, claiming manipulation to favor Meralco-owned companies, but the Supreme Court declined to issue any Temporary Restraining Order (TRO). The many bidding processes scheduled by Meralco are thus proceeding as scheduled.
Meralco assured that its bidding process strictly follows legal procedures set by the Third Party Bids and Awards Committee. Contrary to fears that the bidding could result in higher electricity rates for consumers, Meralco said, the contracts provide that the generating firms assume responsibility for plant outages. They are liable to pay a fine if they are unable to deliver power.
With the country’s increasing industrialization, the need for power will be rising in the coming months and years, along with an increase in urban households in the country. Secretary Alfonso Cusi of the Department of Energy said that the country will be needing more power for “Build, Build, Build” and Gross Domestic Power (GDP) growth under the Philippine Energy Plan (2017 to 2040).
Constructing new power plants is an urgent measure to solve the country’s energy security requirements. “We don’t want to again experience the serious power shortage in the eighties that badly crippled our economy,” Meralco said. “There is need to trust an open and transparent bidding process, rather than propagate ill will without factual basis. Otherwise, we will not be able to build the generating capacity we need in the short time we have before a full-blown power shortage.”
