Leading power distribution utility Manila Electric Co. on Wednesday entered into a power supply agreement with Bacman Geothermal Inc. (BGI) to ensure sufficient electricity in Meralco franchise areas.
BGI, a wholly owned subsidiary of Energy Development Corp. (EDC), owns and operates the Bacman power plants in the Bicol Region.
Meralco and EDC, in separate disclosures to the Philippine Stock
Exchange, confirmed the execution of a power supply agreement, a move that is expected to ease a projected power shortage in the summer months next year.
Under the deal, BGI will supply Meralco with 50 megawatts (MW) of power from the Bacman power plants for a period of five years, “extendible by an additional two years” upon both parties’ mutual agreement.
The power supply agreement, however, is still subject to approval of the Energy Regulatory Commission.
Meralco said the power supply deal will help mitigate its exposure to the Wholesale Electricity Spot Market, particularly in the summer months of 2015.
It said the move is part of its continuing efforts to source additional capacities through interim bilateral contracts with power producers.
Meralco president Oscar Reyes earlier said the company is doubling its efforts to secure short-term power supply agreements to ensure continuity of service amid the looming power deficiency in the Luzon grid.
As part of its efforts, Meralco signed an interim power supply agreement with Aboitiz Power Renewables Inc. for 50-megawatt capacity of the Makban geothermal plant in Laguna.
The distribution utility is also extending its contracts with Global Business Power Corp., 1590 Energy Corp.’s Bauang power plant, and PanAsia Energy Inc.’s Limay power plant.
The Meralco franchise area covers 5.5 million commercial and residential customers in Metro Manila, Bulacan, Cavite, Rizal, and some parts of Batangas, Laguna and Quezon.
EDC is engaged in the exploration of resources, production of energy, and distribution of power supply to smaller electricity distributors.