MANILA Electric Co. (Meralco) has forged a 300-megawatt (MW) emergency power supply agreement (EPSA) for one year with South Premiere Power Corp. (SPPC).

In a statement on Wednesday, Meralco said the deal starts from March 26, 2023 until March 25, 2024.

The power utility giant has secured a certificate of exemption from the Department of Energy from the competitive selection process, which allows Meralco to immediately implement a power supply agreement.

Meralco said the EPSA has a two-part tariff composed of a P1.75 per kilowatt-hour (kWh) fixed cost and a variable cost indexed on fuel price movements.

The agreement partially replaces the 670-MW of capacity Meralco lost from SPPC, a unit of SMC Global Power Holdings Corp.

To recall, Meralco’s contract with SPPC, which was forged in 2019 at P4.2455 per kWh, was subjected to a writ of preliminary injunction by the Court of Appeals, indefinitely suspending the power supply agreement.

Last year, SMC Global Power sought a temporary rate increase, jointly filed with Meralco, saying that SPPC and another unit San Miguel Energy Corp. incurred a combined loss of P15 billion. The rate increase was meant to recover part or P5 billion of the units’ losses.

The company cited a “change in circumstance” when surging fuel costs breached the price range contemplated during the execution of the contracts with Meralco. But the Energy Regulatory Commission (ERC) denied the petition, saying this had no basis as the PSA is a fixed-rate contract.

This is the third time Meralco executed an EPSA after it lost the power capacity from SPPC.

Aboitiz Power Corp.’s GNPower Dinginin Ltd. Co. previously supplied Meralco with a 300-MW capacity through an EPSA forged on Dec. 15, 2022 until Jan. 25, 2023 at a rate of P5.96 per kWh.

The contracting parties agreed on a second EPSA, which was secured on Feb. 3 to last until Feb. 25. The second deal has a full fuel pass-through structure with an implemented rate of P8.53 per kWh.

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. — Ashley Erika O. Jose