South Premiere Power Corp. (SPPC) and San Miguel Energy Corp. (SMEC), both owned by conglomerate San Miguel Corp., are asking for a temporary price adjustment of their power supply agreements (PSA) with Manila Electric Co. (Meralco) amid soaring fuel costs.
The PSAs were signed in 2019 when coal and natural gas prices were relatively stable compared to today.
The 10-year PSAs became effective in December 2019.
SMC claimed that it has been incurring huge losses due to the continued increase of fuel prices at unprecedented levels.
” SMC wants to recover actual fuel cost without any margin,” said Jose Ronald V. Valles, Meralco First Vice President and head of Regulatory Management Office.
Valles said Meralco is concerned that the continued implementation of the PSAs would result in huge losses.
“Meralco cannot afford to lose its PSAs with SMC, which supply more than 1,200 megawatt baseload and mid-merit capacities.
The motion is pending with the Energy Regulatory Commission (ERC) for their evaluation and consideration.
SMEC’s supply contract with Meralco involves 330 MW of capacity from the Sual coal-fired power plant, while SPPC’s supply contract involves 670 MW from the Ilijan natural gas plant.
Aside from high fuel prices, the ilijan plant was derated due to the supply constraint from the Malampaya gas project, forcing SPPC to source its supply to Meralco from the Wholesale Electricity Spot Market.
Spot market prices are also rising due to tight supply and aging power plants due to increased demand.