September 1, 2025 | 12:00am
MANILA, Philippines — The Power Regulatory Fee has granted a five-month extension to a significant fuel provide contract between Manila Electrical Co. (Meralco) and First Gen Corp., citing its important position in making certain vitality safety.
The ERC authorised the events’ proposed interim extension, permitting First Gen to proceed supplying energy to Meralco till Jan. 31, 2026, pushing their contract’s expiration date past the unique August deadline.
“Though the movement evidently impacts Meralco’s era cost… there exist different equally compelling and pressing causes that justify the proposed extension,” the regulator mentioned in an order dated Aug. 27.
“These causes are anchored in coverage concerns, corresponding to making certain grid and provide safety and reliability, which fall extra appropriately throughout the purview of the Division of Power (DOE),” it mentioned.
First Gen, owned by the Lopez Group, has been delivering electrical energy to the ability utility led by tycoon Manuel V. Pangilinan by means of an influence buy settlement (PPA) executed on Jan. 9, 1997.
The provision comes from the 1,000-megawatt Santa Rita pure gas-fired energy plant owned by First Gen subsidiary First Gasoline Energy Corp. (FGPC) in Batangas.
To evaluate the proposed extension, the ERC tasked the Unbiased Electrical energy Market Operator of the Philippines (IEMOP) with simulating the potential price hikes that might end result if Santa Rita operates as a service provider plant.
IEMOP, which operates the nation’s energy spot market, discovered that electrical energy costs may leap to as excessive as P6.23 per kilowatt-hour in comparison with the common market worth of P3.08 per kWh with the PPA in place.
“This enhance in spot costs impacts not simply Meralco prospects however all these distribution utilities with spot exposures,” the ERC emphasised.
The fee additionally sought steerage from the DOE to make sure compliance with the aggressive choice course of (CSP) guidelines and a Supreme Courtroom determination that mandates the ERC’s adherence to the DOE’s coverage directives.
Power Secretary Sharon Garin, in response, affirmed that there’s “no authorized obstacle” within the Meralco-FGPC fuel deal, clarifying that the interim extension will not be additionally topic to CSP necessities.
Underneath current CSP guidelines, distribution utilities are required to obtain all energy provide by means of a “clear, aggressive and well timed conduct” of CSPs, with ensuing provide offers submitted to the ERC for approval.
Nonetheless, the PPA between Meralco and FGPC secured regulatory approval lengthy earlier than the enforcement of all CSP insurance policies issued by the DOE below the Electrical Energy Business Reform Act.
“Nonetheless, the fee stays cognizant of the difficulties imposed on Meralco’s customers within the pursuit of vitality safety for the complete energy system,” the ERC mentioned.
Because of this, the ERC famous that the pass-through prices below the interim extension could be primarily based on the beforehand set charges however calculated at an 83 % capability issue, though the precise dispatch is proscribed to the plant’s minimal stage.
Meralco can also be ordered to adjust to its authorised contracts with different era companies and “nominate all its contracted capacities in a fashion that will yield the least price provide to its captive market.”