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Meralco still looking to replace Sual Power’s terminated supply

MANILA Electric Co. (Meralco) said it is still looking for a replacement for one of its suppliers after the termination of the power supply agreement (PSA) with Sual Power, Inc.

“[The replacement] is still ongoing. We just have to follow the rules of the DoE (Department of Energy) and the ERC (Energy Regulatory Commission) for finding emergency power supply agreements, and then we will also consider the laws of the PSA on the long-term supply sourcing of Meralco,” Lawrence S. Fernandez, vice-president and head of utility economics of Meralco, said in an online briefing on Friday.

Meralco said it would raise power rates in September by P0.5006 per kilowatt-hour (kWh) to P11.3997 per kWh due to higher generation charges on the back of the weakening of the peso against the dollar, as well as higher fuel prices.

The power rate was up from P10.8991 per kWh in August and after three consecutive months of decreases.

Of the generation charge’s components, charges from PSAs and independent power producers (IPPs) increased by P1.0362 per kWh and P0.4776 per kWh, respectively.

PSAs accounted for 39% while IPPs contributed 36% to the overall generation charge.

Mr. Fernandez said the contract termination with Sual Power largely contributed to higher generation charges as cheaper supply from a power generation company was lost.

“We lost [a] lower-cost source of power and we had to replace it [with] other sources. Unfortunately, those other sources, including the spot market, were more expensive than what is being supplied before by Sual Power,” Mr. Fernandez said.

In July, San Miguel Global Power Holdings Corp. terminated the 330-megawatt PSA between its unit and Meralco after the Court of Appeals sided with the supplier to end their contract.

The court decision prompted Meralco to partially source replacement power from the Wholesale Electricity Spot Market (WESM).

Mr. Fernandez said that before the termination, Sual Power supplied Meralco at P3.90 per kWh, which is less costly compared with the average P5 per kWh from the WESM.

For September, the WESM share in Meralco’s cost of power purchased from suppliers increased to 23% from 17% previously.

Meanwhile, Meralco said that transmission charges slightly decreased by P0.0081 per kWh after the National Grid Corp. of the Philippines halted the collection of 3% franchise tax from consumers, as directed by the ERC.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

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. — Sheldeen Joy Talavera

Neil Banzuelo

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