Manila Electric Co. is pushing its commitment to exhaust all means to keep power supply to consumers at the least cost — as provided for in the Electric Power Industry Reform Act — after it announced on Thursday that it signed an emergency power supply agreement with AboitizPower's GNPower Dinginin Ltd. for the supply of 300 megawatts in baseload capacity.

The emergency PSA partially replaces the 670 MW capacity under its agreement with SMC Global Power unit South Premiere Power Corp. which was suspended through a temporary restraining order issued by the Court of Appeals.

A Meralco source said the remaining 370 MW shortfall will be obtained from the spot market.

Meralco recently wrote SMC to demand that it shoulders the difference between the WESM cost and the price in the PSA. SPPC has unilaterally suspended the PSA with Meralco on the strength of the TRO.

GNPower Dinginin started supplying the company with power for P5.96 per kilowatt-hour starting on Thursday, 15 December until 25 January.

The Meralco source said if SMC pays up, there will be no substantial increase in consumers' monthly bills. "It will be a continuing claim," the source said.

"Meralco has exhausted all measures to continue supplying its customers with sufficient and reliable power while mitigating the impact of the TRO on its customers," Meralco said in a press statement.

Without an emergency PSA, the Pangilinan-led power distributor was forced to source power directly from the Wholesale Electricity Spot Market, which is normally more expensive.

Spot prices

Spot market operator Independent Electricity Market Operator of the Philippines said the spot price in November registered an average of P8.53 per kilowatt-hour or around 7.48 percent lower than the previous month's P9.22 per kWh record.

The WESM observed an increment in the December spot prices, which amounted to approximately P9.12 per kWh as of 11 December.

Earlier this week, Meralco asked the power subsidiary of conglomerate San Miguel Corp. to pay for the additional costs it has been incurring following the suspension of its PSA.

In a letter addressed to SPPC general manager Elenita Go, Meralco head of regulatory management Jose Ronald Valles informed the company of its claim against SPPC to pay the price difference between the Wholesale Electricity Spot Market price and the contract price under their PSA.

Valles said the claim will offset the impending power price hike throughout the Meralco franchise area as a result of the effectiveness of the temporary restraining order granted by the Court of Appeals to the SPPC.

"The claims will be on top of 'all applicable fines, penalties and liquidated damages under the PSA (if) the Court of Appeals eventually resolves the main case denying the Petition for Certiorari and/or claim of SPPC,'" he said.

The Energy Regulatory Commission also called out the suspension of the PSA, which it said will instantaneously expose approximately 7.5 million registered Meralco consumers in Metro Manila and Central Luzon and CALABARZON to higher electricity prices.

The regulatory body said the fixed price PSA of Meralco with SPPC covers 670 MW of supply, which, along with the other fixed price PSAs, has shielded Meralco consumers for the past several months from the volatility of costs from the Spot Market and automatic fuel pass-through PSAs.

The ERC said the cessation of the PSA effectively set aside the required proper observance of the terms of the PSA.