ERC grants motion of First Gen Hydro to implement P5.1908-per-kWh supply rate

Dec 28, 2020

The Energy Regulatory Commission granted the motion for reconsideration filed by First Gen Hydro Corp. to implement the P5.1908 per kilowatt-hour rate under its power supply agreement with Manila Electric Co. 

“After due deliberation and evaluation of all evidence submitted and all information gathered by the commission pursuant to its regulatory powers, it resolves to grant the motion for reconsideration by applicant FGHPC,” ERC said in an order.

The regulator approved the motion of Meralco-FGHPC seeking to implement the P5.1908 per kWh rate under the PSA, subject to escalation.

FGHPC won the contract to supply Meralco 100 megawatts during the competitive selection process in September 2019 for an all-in headline rate (VAT inclusive) of P5.1908 per kWh and computed all-in levelized cost of energy (LCOE, VAT Inclusive) of P5.3989 per kWh.

Following the successful CSP, Meralco and FGHPC filed for approval of the PSA with the ERC and the regulator approved the PSA in December 2019 for lower applicable rate of P4.2366 per kWh to the parties, subject to escalation.

“Consistent with the provisions of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001, the commission is obliged to allow entities involved in generation and supply to recover reasonable and prudent costs,” ERC said.

The regulator said the proposed P5.1908 per kWh rate, not subject to value added tax, is “relatively lower and more stable compared to the rates being implemented in Meralco’s expired PSAs.”

ERC also allowed the parties to recover the newly approved rated retroactively.

“Considering that all outstanding issues, as identified in its order dated December 10, 2019 have been sufficiently addressed, the Commission hereby deems it in order to grant the retroactive implementation of the reconsidered rate and fee structure,” ERC said.

ERC directed Meralco to efficiently utilize the contracted capacity from FGHPC, bearing in mind its obligation to supply at least cost.

ERC also said that since the amount granted was only provisional, the final rate that could be recovered should be determined in its final resolution.

It said that in the event that the final rate was lower than the rate previously approved, the reduction should be refunded by FGHPC to Meralco. If the final rate is higher than that provisionally granted, the resulting additional charges should be collected by FGHPC from Meralco.

ERC directed Meralco to ensure that the best available rate in the market vis-à-vis contract price should be used in the computation of optimum blended rates of consumers.