OPINON and OPTION

By ELINANDO B. CINCO

It seems that there is quite literally some light at the end of the tunnel, as Meralco announced recently the successful bidding for the contract capacity of 1,200 MW (NET) to supply Meralco effective December 26, 2019, for a term of 10 years.

Meralco is cutting down generation charges, and this should be welcome news for all us Meralco customers. This is also a confirmation of commitment to securing more power supply in order to provide energy security to the country.

The successful bidding is a testament to the distribution utility’s efforts in securing the least cost to consumers. And succeeded for now, despite the constant threats of some groups’ trying to pull the rug from under the country’s energy security, depriving consumers of lower electricity charges.

They have been on an endless tirade trying to block the securing of more power generators to add more capacity to the grid, which would add supply to meet the growing demand. It appears their benefactors were experiencing some competition, thus they felt they had to put barricades in front of potential up-and-coming power generators.

To me, it seems that those groups virtually want our country to go back to the Dark Ages, in the 90s, when rotating brownouts were a norm. They simply had no solution for our current power crisis, aside from complaining about potential power deals that could aid the situation.

But they did not succeed, as now we consumers can expect even lower generation charge thanks to the recent bidding. With the cut-down in generation charges resulting from the bidding conducted by Meralco a few days ago, it is clear that this era of high generation charges is coming to an end.

To be clear: This bidding was done in accordance with the Department of Energy (DOE) Circular requiring distribution utilities to procure power through Competitive Selection Process (CSP). The CSP was administered by the Third Party Bids and Awards Committee (TPBAC) that was constituted pursuant to the DOE circular.

The process was faithfully followed. After the opening and evaluation of the bids that day, the TPBAC declared the bids submitted by PHINMA Energy Corporation, San Miguel Energy Corporation, and South Premiere Power Corporation to be the best bids. The TPBAC made the findings based on a non-discretionary “pass/fail” assessment for completeness after they determined that there was no failure of bidding.

We, as consumers, can rest assured that the entire process is above-board. Pursuant to Section 5 of the Instructions to Prospective Bidders (IPB), the best bids will now undergo post-qualification within the next seven days. Afterward, the Third Party Bids and Awards Committee shall issue respective notices of award in favor of those who satisfactorily passed post-qualification.

Here is a recap of the lower generation costs that we can expect because of the successful bidding: PHINMA energy Corporation’s bid was for contract capacity 200 MW with an all-in headline rate (VAT inclusive) of 4,7450 PhP/Wh and Computed all-in LCOE (VAT inclusive of 4,8849 PhP/kWh. San Miguel Energy Corporation’s bid was for 330 MW at all-in headline rate (VAT inclusive) of 4,6314PhP/kWh and Computed all-in LCOE (VAT inclusive of 4,9299 PhP/kWh.

South Premiere Power Corporation’s bid was for 670 MW and had an all-in headline rate (VAT inclusive) of 4,6314 PhPkW and Computed all-in LCOE (VAT inclusive of 4,9300 PhPWh. These bids collectively totaled 1,200 MW in contract capacity. And all these rates are much lower than the high generation charges of the gas plant PSAs of First Gen.