DEFERRED

The Energy Regulatory Commission says it has deferred action on most of the power supply agreements submitted for the commission’s approval by Distribution Utility Meralco and its alleged affiliated generation companies.

this was revealed by the ERC  as welll as Meralco in a joint hearing of the House Committees on Energy and Good Government.

ERC Commissionner Gloria Yap Taruc revealed  that the PSA beteen Meralco and Redondo Peninsula was heard in November 2016 and this has been submitted for resolution by the ERC.

Yap Taruc also said that the PSA between Meralco and Atimonan1 energy and Meralco and St. Rafael Corporation were  heard also in November 2016  and that both parties have filed an offer of evidence, however motions for intervention was filed last week only.

Meanwhile, the  proceedings on the PSA’s between Meralco and Central Luzon Premiere Power Corp, Meralco and Mariveles Power and Meralco and Global Luzon Energy Development Corporation were all suspended because these did not have an environment clearance certificate. the PSA’s between Meralco and central Luzon and Meralco and Mariveles also have pending petitions for intervention filed by different consumer groups.

the PSA between Meralco and Panay Energy Development Crop was heard in September 2016 and there has also been a petition for intervention filed by different consumer groups.

Yap Taruc said, “with respect to Manila Electric  and Redondo Peninsula energy inc, the intial hearing was done Nov 23 2016 and the applicants  have already filed their formal offer of evidence as noted earlier the interventions came only after the cases were submitted for resolution.”

Yap Taruc added, “in the case 2016 092 Meralco and Atimonan One energy  the intial hearing was 14 Nov 2016 the applicants have alreday field their formal offer of evidence the motiosn for intervention were only field last week. there wa smotion for intervention field ms fe arbait the one of mr junia wad filed 2 weeks ago”

Yap Taruc also said, “2016 093 manila electric and st rafael power corporation the initial hearing was done last nov 29 2016 the applicants ahev already field their formal offer of evdience there were also motions for interventiosn filed belatedly.”

Yap Taruc also revealed , “manila eletric and central luzon premiere power corporation there are no rpoceedings yet the proceeding  has been suspended by virtue of the absence of an ecc b that as it may petitions for intervention was filed. 2016 113 manila electric company and amriveles power generation corproation the proceding was likewise suspened because there was no ECC so there are also petitions for intervention. with respect to manila electric and panay energy development corproation intiial heraing done sept 19 2016 likewise there were petitions for intervention filed.  with respect to manila electric and global luzon rpoceeding has likewise been suspened by vritue of the absence of ECC”

the ERC has required Meralco to comment on these petitions for intervention as part of due process.

Wiliam Pamintuan, Meralco VP For legal denied  accusations that these were midnight deals signed before a rule imposing a mandatory competetive selection process was imposed as a requirement for power supply agreements. he also clarified only 2 PSA’s are submitted for resolution. “the questionned 7 PSAs before this honorable committee  have undergone rigorous process. thorugh lengthy and sometimes contentious negotiation process. the PSA that we have for one of our contracts started negotiations 2012 and was concluded only 2016. Meralco did not file  for any extension or request for the restatement of the competetive selection process mandate.”

Pamintuan added, “we would like to emphasize that it is not the policy of meralco that equity must be presnet before it negotiates with a particular  generation company.In the case of Redondo, Meralco interest in the said company meralco entered  into a joint venture with Aboitiz and TaiwanCo Gen in 2009 in RP energy. the negotiations for the PSA only commenced in 2012. theres a 3 year gap. In the case of Atimonan we applied the same principle even though it is a 100% owned company by Meralco  this time we also underwwent the singular proces sof having a china wall between our respective companies in so far as Meralco power gen and Meralco Distribution utility. Meralco has contracts with several gencos that are not affiliated companies.”

Pamintuan also said, “in so far as the 7 PSAs we have submitted to the commission 1 pSA Meralco ahs nto invested in this is the central luzon power plant company meralco has no invetsment or stake in that power plant.”

Ivanna dela Pena First VP for Meralco also stressed that cooperatives and other groups sought the extension of the CSP deadline.

dela Pena reiterated this as the discussions began as early as 2012. dela Pena said these 7 PSA’s were signed to replace existing PSA’s and cover future load requirements.  “the imposition of the CSP in Oct 2015…actually had cost  high retroactive application…negotiations were prejudiced. the extension of the deadline had the effect of making mandatory apply prospectively.it benefitted not only Meralco but especailly electric cooperatives and distribution utilities. Meralco’s existing PSA’s covered 2355 MW are scheduled to expire by december 2019 such the need for replacement acapcities while they could be extended for upto 3 years  current CSP rules provide for an extension of 1 year only. we signed 7 PSA’s in april 2016  with a total contracted capacity to replace existing PSAs are cover our future loan requirements. “

dela Pena added, “the procurement process for the 7 PSA’s began at least a year thats the minimum before filing for ERC approval in 2012 therewas already discussions with RPE Redondo. in 2014 there were dicussions with Global Business Power  and also with St Rafael,  Atimonan Energy… Febryuary 2015 Mariveles submitted its propsoed turnsheet March 2015 St rafael and Central Luzon submitted  roposed turn sheet 2015 Atimonan energy submitted its propsoed turn sheet this culimated in the signing of the PSA’s”

Meralco also maintained that these represent the least cost to consumers. the PSA’s cover 20 years even if Meralco’s franchise will only be good for 11 more years from today. the Capacity recoevery fee for the entire duration of the 20 year contract is fixed, except for the cost of fuel which fluctuates.

Bayan Muna Rep. Carlos Zarate however reiterated that these appear to be sweetheart deals between Meralco and the generation companies which he claimed were affiliates.

Pamintuan however insisted that having an equity in the generation company is not part of Meralco’s policy. Pamintuan said Meralco has no stake in Central Luzon and Global Luzon power. However Meralco has a 40% onwership in San Rafael, while Meralco Power Generation has 48% in Redondo Peninsula, Meralco has 49% in Mariveles. Meralco says it has an investment in Panay Development and clarified they have an 8% interest in Global business power.. “we would like to emphasize that it is not the policy of meralco that equity must be presnet before it negotiates with a particular  generation company. In the case of Redondo, Meralco interest in the said company meralco entered  into a joint venture with Aboitiz and TaiwanCo Gen in 2009 in RP energy. the negotiations for the PSA only commenced in 2012. theres a 3 year gap. In the case of Atimonan we applied the same principle even though it is a 100% owned company by Meralco  this time we also underwwent the singular proces sof having a china wall between our respective companies in so far as Meralco power gen and Meralco Distribution utility. Meralco has contracts with several gencos that are not affiliated companies.

we just like to clarify there is another company  where meralco is not invested. Cetral Luzon and Global luzon. those 2 meralco has no particular invetsment with respect to san rafael there is a shareholders agreement between  Meralco power gen and DMCI groups and semirara coal company. we have about 40% ownership stake in St Rafael. as mentioend earlier RPE there was an agreement sometime in 2009 between Aboiti Tawincogen and Meralco power gen, in terms if interest share Meralco Power gen owns about 48% of that company. Mariveles we are 49% owner 51 is owned by San Miguel global Power Panay Development is owned through our invetsment in Global Business power we do not have a direct stake in Panay electric our interest there is derived from our 8% interest in Global Business Power.”

ERC Commissionner Alfredo Non for his part maintained that they did not extend the deadline for CSP’s to accomodate Meralco’s supposed sweetheart deals which were filed just days before the deadline. Non clarified that the extension was made to give an opportunity for those who completed negotiations but did not get to submit to ERC before the deadline a chance as the CSp may have an impact on their creditors. “meant to give time for those who have already completed their negotiation for PSA but did not have enough time to submit to ERC prior to the effectivity date. the question is are you going to subject these companeis that have alreday completed their negotiations to a CSP that could impact on their commitments to creditors to other institutions that was a long discussion that we had.  since there was no CSP requirement before it beocmes mandatory now not to give a  transitory period for some companies to adjust to the requirement. it is not really intended to accomodate certain companies or certain contracts it was to give flexibility for those that have udnergone the negotiation process long before the effectivity date.”

Non clarfies this doesnt guarantee approval because these still have to be scrutinized.

Oppositors to the deals claim the total earnings of the 7 PSA’s  could be over 2 trillion pesos, that could be charged  to consumers.

ERC Commissionner Josefina Asirit for her part clarified that ERC’s approval of a connection link between one of the generation companies and the NGCP grid is already an indication of the ERC’s intent to approve the PSA’s. “the approval of one is not, does not mean that the PSA will be approved it is a technical requirement it is actually a physical infrastructure for the plant to be able to connect to the grid at marami po itong dinadaaanan na pruseso para masigurong compliant sila with tehcnical standards. hindi po tintignan kung may PSA ba siya. the approval of the PSA is not contingent on the approval of the point to point facilities.”

Last week, it was reported that The Energy Regulatory Commission has approved the application filed by Atimonan One energy Inc for the authrity to develop and own dedciated point ot point limited transmission facilities connecting the Atimonan One energy Coal Fired Power Plant (A!E) to the New Pagbilao Substaton of the National Grid Corporation of the Philippinbes.

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In its May 30 decision, it was revealed that Meralco Power Generation Corporation (MGEN) has one hundred percent equity interest in A1E.  MGen is, in turn, a 100%-owned subsidiary of Manila Electric Company (MERALCO).  MERALCO, a publicly-lIsted corporation, is the sole distribution utility for the entire of Metro Manila and nearby provinces. 

In the previous hearing last March,   ERC admitted that MERALCO indeed submitted its seven PSAs only on April 26-29, 2016, just days before the deadline extension which was set at April 30, 2016.     ERC admitted that there was indeed a deliberation by the Commission approving the CSP deadline extension. Likewise ERC justified that the extension of the deadline of CSP was to accommodate all the letter-inquiries against CSP, all of which were written raising the following grounds:a.     impairment and infringement of contracts b.     non-impairment of contracts; c.      may affect those ongoing negotiations; and d.     application for exemption, among others

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