THE Manila Electric Co. (Meralco) is sticking to the original terms for the second round of the competitive bidding covering 1,200 megawatts (MW) of greenfield supply, its top official said.
“We’ve considered the [Department of Energy’s] DoE proposal and are minded basically to proceed on the basis of what we have set out originally which is to differentiate the brownfield from the greenfield [supply],” Meralco President and Chief Executive Officer Ray Espinosa said in a press briefing.
Meralco conducted in September the competitive selection processes (CSP) for the 1,200-MW supply from a greenfield power plant or a power facility that is yet to be constructed.
This was one of the three CSPs conducted by the listed firm to secure power in the coming years.
But the bidding was declared a failure after Atimonan One Energy Inc., a subsidiary of Meralco PowerGen Corp., the power generation arm of Meralco, emerged the lone bidder for the auction.
PanAsia Energy Inc. and Mariveles Power Generation Corp., an entity under San Miguel Corp., withdrew from the competitive bidding ahead of the bid deadline while First Gen Corp. failed to arrive and submit its bid documents.
The Energy department wanted the power distributor to tweak provisions for the CSP of the greenfield capacity to encourage more participants and ensure power supply in the country.
Energy Secretary Alfonso Cusi wanted Meralco not to subject the entire capacity of power plants to public bidding and allot a portion of that capacity to the Wholesale Electricity Spot Market (WESM), the venue for trading electricity in the country.
“We’re talking of the size of the plant, not to be limiting then I [want] the plant not to be 100-percent contracted because we want to build our electricity market,” Cusi told reporters last month.
Espinosa, however, pointed out the “financial and economic differences” between brownfield (supply coming from existing power plants) and greenfield plants.
“One of the suggestions of the DoE is to allow old existing plants to bid as well for this 1,200-MW capacity, quite different from the DoE was when we started out,” he told reporters.
The Meralco official stated the power supply agreement (PSA) for the greenfield supply is for 20 years. “We wouldn’t want to allow the power generator to recover based on capital or any reason of return.”
Conversely, the power deal for brownfield capacity normally runs from five to 10 years “as demonstrated by the successful CSPs we have conducted.”
Meralco, according to the executive, also relaxed certain terms for the greenfield supply wherein interested entities can meet their power requirements by tapping facilities from multiple locations.
“Before, we only had blocks of plant configuration of 600 MW. Now, we have brought down the plant configuration down to 150 MW. A power generation could have 150 MW units go all the way up to 1,200 MW, as opposed to just a block of 600 MW or 1,200 MW,” he explained.
Espinosa also noted Meralco has provided opportunities both for new and existing power plants in the bidding process.
“It will be difficult for us to move to a situation where a greenfield capacity that we need to ensure reliable and affordable supply will eventually be open to older and pre existing plants, that will crowd out investors or power generators who want to build new plants. It would simply be very difficult for them to compete,” he added.
Meralco Chairman Manuel Pangilinan said the country has experienced some local brownouts, noting the “tight margin supply to demand” in terms of available supply capacities.
“We’d like to widen that margin and Meralco’s more than willing to build plants a number of plants ranging from coal to renewables… principally solar and some wind,” he said.