Meralco eyes power plant stake

Manila Electric Co. (Meralco), the country’s largest power distributor, is looking at buying into existing power plants to kick-start its foray into power generation, a company official said last week. Jose P. de Jesus, Meralco president and chief operating officer, told reporters they were planning to acquire a stake in existing power plants to prepare for open access, where large end-users can choose their own power generators. "In the short term we have to look at brownfield (existing power plants) to take care of the short-term requirements that we anticipate will happen as early as 2011 to 2012," he said. Open access and retail competition in the power sector may start a year after the Power Sector Assets and Liabilities Management Corp. (PSALM) completes the sale this year of the Independent Power Producer Administrator contracts of the Ilijan and Unified Leyte plants. The PSALM earlier breached the 70-percent threshold after selling the 600-megawatt (MW) Calaca coal-fired plant to DMCI Holdings, Inc. in July last year. De Jesus said Meralco was in talks with newly privatized power plants. "We have some under consideration and under some preliminary discussion but it’s too early to say. We are talking to some, those who have been privatized for example, maybe [we can] buy into them," de Jesus said. He added that their preference is embedded power plants, or facilities located within their franchise area. The franchise area of Meralco, the country’s largest electric utility serving about 4.6 million customers, covers the entire Metro Manila, as well as the nearby provinces of Bulacan, Rizal, Cavite and parts of Laguna, Quezon, Batangas and Pampanga. De Jesus said they might put up their own power plant as part of a long-term plan. "In the long-term, of course, we could look at greenfield (new power plants)," he said. Regulations limit distribution utilities to obtain only half of their power requirements from their own or affiliate generating power plants. Out of the average 5,000 MW peak demand within the Meralco peak demand in their franchise area, about 1,500 megawatts are being provided by Lopez-led First Gas Power Corp.’s Sta. Rita and San Lorenzo plants. Meralco more than doubled its net earnings to P6 billion last year following a 25.70-centavo increase in its distribution charge under the so-called performance-based regulation scheme that started in April last year. — Jose Bimbo F. Santos, BusinessWorld