Meralco races to augment 1,800 MW of crucial energy after SMC exit

Manila Electric Co. (Meralco) may seek partners for 1,800 megawatts (MW) of crucial supply after San Miguel Corp. (SMC) withdrew its deal with the power utility firm to provide electricity by 2024 and 2025.

'We confirm receipt of notices from San Miguel Global Power and are currently studying our available options, including the possibility of requesting DOE (Department of Energy) approval to conduct another CSP (competitive selection process) for the 1,800-MW requirement of Meralco starting 2024,' Meralco said in a statement sent to reporters late Friday.

The 1,800 MW of energy is enough to power around 720,000 to 1.6 million homes a year. The 1,800-MW requirement of Meralco is 13.71 percent of the DOE's projected peak demand in Luzon of 13,125 MW this year.

The company is referring to contracts won in 2021 by SMC Global Power Holdings Corp. subsidiaries Excellent Energy Resources Inc. (Eeri) and Masinloc Power Partners Co. Ltd. (MPPCL).

Eeri was to supply 1,200 MW through its liquefied natural gas plant at a levelized cost of electricity (LCOE) of P4.1462 per kilowatt-hour (kWh) by 2024. MPPCL, meanwhile, proposed to provide the remaining 600 MW via its coal-fired plant at P4.2605 per kWh by 2025.

LCOE measures the average cost of operating a power plant over its lifetime.

The prices set by the two SMC units are significantly lower than the LCOE reserve price of P5.2559 per kWh indicated by Meralco in the original bidding documents.

Meralco did not elaborate as to why the contracts were withdrawn, saying only it would make appropriate disclosures regarding the matter in due time.

The Energy Regulatory Commission (ERC), meanwhile, said Meralco had informed it of filing the motion for withdrawal today, March 20.

'Once received, we will review and determine compliance with [the] law and legal processes. The matter of conducting another CSP is between Meralco and DOE,' ERC chair Monalisa Dimalanta told the Inquirer in a text message.