A RESOLUTION seeking the postponement of bidding for Manila Electric Co.’s (Meralco) 600-megawatt and 400-megawatt power supply requirements was filed at the Senate in a bid to review the terms of reference to ensure fairness in the selection of bidders and determine the lowest energy supply cost.
Sen. Alan Peter Cayetano’s concern centers around the current rules, which he believes lack clarity and may favor specific bidders over those using indigenous natural gas as power suppliers.
Starting next year, Meralco will search for new suppliers capable of providing 600 MW of power to meet its requirements.
Meralco said it had begun the competitive selection process (CSP) to secure its baseload supply to fulfill the power distributor’s needs in 2025.
This move follows the Department of Energy’s (DoE) issuance of a Certificate of Conformity for Meralco’s latest Power Supply Procurement Plan.
The CSP involves a 15-year Power Supply Agreement (PSA) scheduled to start on Aug. 26, 2025.
In filing Senate Resolution 1090, Cayetano urged the Senate to call on Meralco to defer its CSP, saying the current rules are unclear and may put certain bidders at an advantage at the expense of power suppliers that use indigenous natural gas.
“The Terms of Reference (TOR) of CSP 1 and CSP 2 do not reflect the real preference afforded to indigenous natural gas and its full utilization,” he said in the resolution.
These concerns were raised during a public hearing by the Senate Committee on Energy on July 18, 2024, on the impending depletion of Malampaya gas and the country’s transition to cleaner fuel sources.
In his resolution, the senator wrote that the Malampaya indigenous natural gas will be unutilized “if the indigenous natural gas-powered plants are not given a chance to compete fairly in CSP 1 and CSP 2.”
He added that this is “contrary to the Epira (Electric Power Industry Reform Act) and Department Order No. 002023-10-0022 policy and objectives of transitioning to a clean energy mix.”
“The lack of clarity in the rules regarding TORs in the biddings will result in the underutilization of our indigenous natural gas [and] open the possibility of circumventing the distribution utilities’ obligation to supply their captive customers in the least-cost manner,” he wrote.
“The CSP must ensure fairness and competition in the bidding process so that only power suppliers offering the true least-cost supply will be contracted.”
Based on the DoE’s advisory dated Oct. 11, 2023, the TOR encourages power suppliers with natural gas-fired power plants to participate in bidding and prioritize using indigenous natural gas.
Meralco’s bids and awards committee for PSAs set June 25, 2024, as the deadline for submitting expressions of interest. The pre-bid conference was scheduled for July 4, and the bid submission deadline is August 2.
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