The Energy Regulatory Commission (ERC) recently issued provisional authority to Manila Electric Co. (Meralco) and First Gen Hydro Power Corp. (FGHPC) to enforce their power supply arrangement (PSA).

In the order of 8 January, the ERC reported that both companies would comply with the relevant cost of P4.2366 per kilowatt-hour (kWh) regardless of the plant performance factor, which determines how much the plant works at its full capacity. The Agency has stated that the increase will be “subject to some acceleration,” which will cause the rate to increase.

“Meralco is hereby guided to allow effective use of the contractual resources of FGHPC, keeping in mind its duty to produce at least rate,” the ERC said in its order.

The ERC added that it will assess the final rate in its final resolution of the joint application by Meralco and FGHPC.

The Commission specified that Meralco would use the “best possible cost” on the market as it determines the optimum blended generation rate. ERC also directed the utility giant to defend its proposed plant capacity factor and to clarify in writing the contradictions of its details on the average daily load curve and the supply-demand scenario.

The order was based on a joint application submitted by Meralco and FGHPC in 2019 requesting the acceptance of their supply arrangement by the ERC.

In November, the ERC granted an appeal for reconsideration to FGHPC submitted by the company in June. In its order of 11 November, the ERC claimed that the relevant rate was P5.1908 kWh, which would be subject to an escalation.

Three years earlier, Lopez-led First Gen Corp. announced that its unit had entered into a power supply contract with the power delivery business for the selling and purchase of 414 megawatts of baseload energy.

Power will come from First NatGas Power Corp. San Gabriel’s combined-cycle gas-fired power plant in Batangas City. The San Gabriel power station began supplying power to the Luzon grid in November 2016.

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