Meralco power bidding rapped

Manila Electric Co.

A GROUP of lawmakers is calling on the Energy Regulatory Commission (ERC) to act on what they said were irregular terms set by the Manila Electric Co. (Meralco) in bidding out 1,800 megawatts (MW) of electric supply.

Sta. Rosa City Rep. Danilo Ramon Fernandez wants the ERC to stop Meralco from proceeding with the bidding until a review of the terms of reference is completed.

During the hearing of the House Committee on Legislative Franchises on November 22, Fernandez, who accused the utility of being a “monopsony” and has advocated for the breakup of its franchise into three, said Meralco’s invitation to bid stipulated that only power plants in operation not earlier than Jan. 22, 2020, can join.

A monopsony exists when a single buyer controls or dominates the demand for goods and services.

“Your invitation to bid was for 1,800 MW; your provision for your power supply agreement calls for 1,800 MW, and if I may read, what you also said in that provision of your bidding — single or portfolio plant provided a power plant should be in commercial operation not earlier than January 22, 2020,” Fernandez said.

The stipulation, Fernandez said, only proved the monopsony allegations against the utility, since it automatically excluded many of the power plants that should be participating.

“You have said in your power supply agreement in the bidding, power plants that have not started operations [from] January 2020 to May 2025, you can’t join, you are all excluded,” Fernandez said.

“That is trademarking, that is branding. That’s tailor fitting, that’s illegal in accordance with the PCC (Philippine Competitive Commission) and international agreement which states that trademarking is prohibited; it does not allow ‘tailor-fitting’,” he said.

He also said the “tailor-fitting” by Meralco has limited the number of bidders for the company’s 1,800 MW capacity, which was to be sourced through the “competitive selection process” (CSP).

“Your responsibility to us (is only as) a distribution utility only. You have to get the least cost. How can you get the lowest cost if many power plants are excluded?” Fernandez said.

In the same hearing, ERC Chairman Monalisa Dimalanta said that Meralco was told to make sure that it is not unduly limiting the number of potential bidders, adding that a letter was sent to the company stating the ERC’s observations on the published bid invite.

There are six bidders for the CSP for Meralco: NPower Dinginin (GNPD), First NatGas Power, SP New Energy, Mariveles Power Generation, Excellent Energy Resources and Masinloc Power Partners.

Dimalanta said the ERC, as the regulator of the power industry, must promote competition, encourage market development, ensure customer choice, and penalize abuse of market power in the industry.

Caloocan Rep. Dean Asistio said he hopes “Meralco will be conscientious and not only think of profits.”