Meralco announced on Wednesday another successful bidding session for a contract to supply 500 MW of mid-merit capacity effective 26 December, 2019 for a term of five years. This 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.
TPBAC declared the bids submitted by First Gen Hydro Power, Phinma Energy, and South Premiere Power to be the best bids. They will now undergo post-qualification and TPBAC is expected to issue Notices of Award in favor of those who satisfactorily passed post-qualification on 12 September, 2019. It is to be followed by the signing of the power supply agreements with Meralco next week.
Meralco declared that the successful CSP will result in additional savings and, ultimately, least cost to consumers. It will be recalled that Meralco also successfully bid out 1,200 MW of baseload capacity last 9 September.
It also emphasized that the bids’ all-in rate already includes line rental and VAT and the cost of replacement power for all plant outages. The generator companies will also be liable to pay a fine if they are unable to deliver power, which will be used to reduce the generation cost to the consumers.
The resulting prices from the CSP are significantly lower than their average generation cost today of around P5.88 per kWh (VAT inclusive). The results of today’s bidding for 500 MW are expected to save consumers P4.4 billion annually for the next five years. This is equivalent to a rate reduction of around P0.13 per kWh for consumers, starting December 26, 2019.
Along with the results of first successful CSP, consumers are projected enjoy total savings of around PhP 13.86 billion per year, or a rate reduction of P0.41 per kWh.
TPBAC Chairman Atty. Ferdinand Domingo expressed support for the CSP and the results of the process, saying, “From a consumer perspective, I am confident that these new contracts will ultimately lead to the much-needed additional power supply to address our growing demand in the country. Moreover, we achieved our objective to increase supply at lower costs. The bid prices submitted were pro-consumers. Meralco’s 6.7 million residential customers will enjoy lower rates for the next 10 years.”
Atty. Adrian S. Cristobal also stated his belief in the CSP. He said, “This is a process that tries to combine best practices of both private and public procurement. The savings for a typical household of P0.41per kWh translates to annual savings of around P984 per year.”