Consulting firm calls for disapproval of Meralco PSAs
Non-approval of Manila Electric Co.?s power supply agreements (PSAs) will foster real competition in the power market.
According to a report of Lantau Group, a Hong Kong-based strategy and consulting firm, approving the Meralco PSAs will leave a contracting gap given the huge capacity it has signed up in the next 20 years.
However, disapproving the Meralco PSAs re-opens the competition to allow for cheaper options to creep into those gaps.
?A real CSP (competitive selection process) process allows the cheapest option to win and thus enhances economic options,? the Lantau Group said.
Meralco is asking the Energy Regulatory Commission (ERC) to approve its seven PSAs, which covers a combined capacity of 3,551 megawatts (MW). Most of these contracts are through firms owned or partly owned by Meralco through subsidiary Meralco PowerGen Corp. (MGen).
The contention in these PSAs lie on the date these were submitted for approval, which is April 29, 2016, one day prior the effectivity date of the CSP policy, which requires power distributors to undergo competitive bidding in securing PSAs with generation companies.
Meanwhile, the ERC said last month that will decide on Meralco?s PSAs within three months after giving more time for intervenors to file their position papers.