MANILA ELECTRIC Co. (Meralco) may have to resort to the spot market for power source after failing to secure bids for the 260-megawatt (MW) peak requirement in preparation for the increase in demand during the dry months.
The power distributor did not receive any expression of interest for the second round of competitive bidding upon the deadline on March 8, according to a document from Meralco’s website.
“The bidding is considered to have failed since ‘[n]o captive market supplier purchased the bidding documents after the deadline set in the published [Final Invitation to Bid/Terms of Reference],’” the company said.
Lawrence S. Fernandez, chairman of Meralco’s bids and awards committee for power supply agreements, said on Friday that the company may have to purchase power from the Wholesale Electricity Spot Market, which serves as the trading floor for electricity.
“If there will be no [bidders for] 260 [MW] today, then we will have to resort to use more of the other contracts. If they are already at their limit, they will have to get from the spot market,” Mr. Fernandez said in mixed English and Filipino.
Citing the rules of the Energy Regulatory Commission (ERC), he said that the company may also engage in negotiated procurement after two failed bids.
“We know that historically, prices in the [spot] market rise during summer months because more [consumers] need electricity,” said Joe R. Zaldarriaga, Meralco’s spokesperson and vice-president for corporate communications.
“So, if we will not cover our requirements through an interim power supply agreement, we may have a problem because we will be exposed to the [spot] market,” he added.
Last month, Meralco announced that two bidders had withdrawn their expressions of interest, resulting in a failed bidding process, prompting the company to initiate a second round.
The two interested bidders, 1590 Energy Corp. (1590 EC) and San Roque Hydropower, Inc. of San Miguel Global Power Holdings Corp. (SMGP), did not proceed with submitting bids by the deadline on Feb. 26.
A document from Meralco showed that 1590 EC decided to withdraw due to the “excessive and unreasonable bid security required.”
The power distributor said that the computation or requirement for bid security in the bidding process only followed a provision of the ERC’s guidelines on competitive selection process.
It prescribed the amount of the bid security to be “equivalent to [the] three-month contract cost of the proposed power supply agreement using the bid price offered by the bidder.”
Meanwhile, Meralco and Limay Power, Inc., another subsidiary of SMGP, said they would file a joint application with the ERC to seek the approval of their 400-MW power supply agreement.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera