THE Energy Regulatory Commission (ERC) has asked First Gen Corp. and Manila Electric Co. (Meralco) to justify their proposed extension of a power purchase agreement (PPA) for supply from a Batangas gas-fired power plant.
In an order dated Aug. 22, the ERC directed the companies to submit an explanation on “whether the extension of contract will not result in an excess contracted capacity as well as a simulation on the impact thereof on the generation charge.”
The order was issued in response to the joint motion filed by First Gas Power Corp. (FGPC), a subsidiary of First Gen, and Meralco on Aug. 22 seeking approval of an interim PPA extension.
The companies are also asking the regulator to allow the recovery from customers and Meralco’s payment to FGPC of “attendant costs during implementation of the interim extension.”
The ERC further directed FGPC and Meralco to explain how they intend to utilize or dispatch their existing contracted plants.
Previously, FGPC submitted a letter to the ERC seeking a PPA extension to continue supplying electricity to Meralco from the 1,100-megawatt (MW) Sta. Rita gas plant in Batangas for up to 15 years.
The contract for the facility is set to expire at the end of the month. The plant, which began full commercial operations on Aug. 17, 2000, has been supplying electricity to Meralco under a 25-year PPA.
First Gen President and Chief Operating Officer Francis Giles B. Puno said the company might need to consider ways to reduce operational costs, including “potentially temporary mothballing or shutting down the facility for a prolonged period,” if the contract is not extended.
“Can the grid live without 1,100 MW of reliable, efficient gas-fired capacity in the future? My position is it cannot,” Mr. Puno said in an earlier interview.
First Gen owns and operates four gas-fired power plants with a combined capacity of 2,017 MW.
At present, its total capacity across geothermal, wind, hydro, solar, and natural gas-fired plants stands at 3,668 MW. — Sheldeen Joy Talavera
