The Manila Electric Co. (Meralco) has secured additional power capacity of up to 270 megawatts for this summer under a supply deal just signed with PanAsia Energy Inc.
A disclosure to the Philippine Stock Exchange on Thursday showed that Meralco entered into an Interim Power Supply Agreement (IPSA) with PanAsia Energy for the purchase of up to a maximum capacity of 270MW on a non-firm basis for the period April to June.
Meralco has been seeking to boost its capacity to cope with an expected surge in demand at the height of summer and avoid spot market exposure, which could further push up electricity prices and gain the ire of the public.
PanAsia owns and operates a 620-megawatt diesel power facility in Limay, Bataan province. The plant was previously owned by SMC Global Power Holdings Corp., the power generation unit of conglomerate San Miguel Corp.
Meralco stressed that the IPSA with PanAsia will only take effect upon final approval by the Energy Regulatory Commission (ERC).
So far, Meralco has secured 474 megawatts of additional power capacity for summer from supply agreements it has signed since last week.
More than a week ago, Meralco sealed three power supply deals in anticipation of tight power supply in the coming months.
In a previous filing with the stock exchange, Meralco disclosed it has signed IPSAs with three local firms for the supply of a combined capacity of 204 megawatts.
Meralco specifically signed deals with Toledo Power Co., Panay Power Corporation, and 1590 Energy Corporation.
The distributor’s IPSA with Toledo Power involves a 28-MW power capacity and an option for an additional 9-MW, while its agreement with Panay Power requires capacity of up to 27-MW. Both IPSAs cover the period April 1 to June 30, 2014.
Similarly, Meralco executed an IPSA with 1590 Energy for the purchase of up to 140 MW and associated energy output from the latter’s Bauang Power Plant.
“The IPSAs were entered into to address the increase in demand and mitigate the company’s exposure to the Wholesale Electricity Spot Market (WESM) during the summer months,” William Pamintuan, Meralco First Vice President and Head of Legal, then told the local bourse.
Still subject to ERC approval, the agreements will expire on June 30 this year, unless terminated earlier or extended.
The Department of Energy had called on Meralco to start contracting power generators for additional capacity to cover the requirements during the summer months. Energy Secretary Jericho Petilla said boosting the power distributor’s capacity must be done to avert excessive power price hikes that could result from Meralco’s high exposure to the WESM.