DOE flags 1.2-GW deal over supply issues

The Department of Energy (DOE) has sounded the alarm on Meralco’s 1,200-megawatt supply deal with Excellent Energy Resources Inc. (EERI), citing concerns over fuel shortages and facility readiness as summer heat and election season pressures add to the challenge.

Meralco, in early January, awarded a total of 1,800 MW of future baseload supply to GNPower Dinginin, Mariveles Power, and EERI.

During a media briefing on Monday, Energy Assistant Secretary Mario Marasigan flagged that while the competitive selection process involved 1,800 megawatts, 1,200 of which would be sourced from EERI’s natural gas facility, the plant has not yet reached full operational capacity.

“As far as the status of the natural gas facility is concerned, we are not yet fully aware, and per our monitoring, not all the units of EERI or Excellent Energy Resources are already in full commercial operation,” Marasigan said.

He noted that the plant is still undergoing testing and commissioning, despite being expected to deliver electricity last year.

According to the power supply agreement, EERI’s full capacity was supposed to be operational by December 2024.

“If the facilities are still under testing and commissioning, then that's one of our concerns,” Marasigan added, stressing the gap in the power supply if the plant cannot fulfill its obligations on time.

The DOE is also monitoring the status of the Linseed liquefied natural gas (LNG) facilities, which provide fuel to EERI’s plant. Marasigan explained that while the LNG storage unit was expected to be operational by 15 May, delays may push this timeline to the end of May, which causes further concern as EERI and the Ilijan natural gas facilities are competing for the limited supply.

“The lack of supply is one of the reasons for having the EERI natural gas facilities to fill in the 1,200 MW of its contracted capacity,” Marasigan said.

For Energy Undersecretary Felix William Fuentebella, the issue highlights the need for other distribution utilities to ensure timely procurement and construction of generating facilities.

“The DOE has also been monitoring what they need to procure to ensure the timely completion of generating facilities,” he said.

As such, Fuentebella pointed out that distribution utilities must comply with Renewable Portfolio Standards and be vigilant in choosing reliable generating facilities that meet contractual timelines to avoid further disruptions.

With a looming supply gap and rising demand, particularly during the summer months and the election season, the DOE is urging the industry to take proactive steps to avoid potential price hikes and service interruptions.

“The responsibility of contracting at the least cost for the captive customers lies with the distribution utilities,” Fuentebella said, urging caution and careful planning to avoid any inconvenience to consumers.

DAILY TRIBUNE has reached out to Meralco for clarification, but as of press time, no response has been received.

To recall, Meralco had previously indicated in its power supply deal notice of award to the winning bidders that, as a regulated entity, it has conducted its business in full compliance with all rules and regulations issued by the ERC and DOE.