THE Energy Regulatory Commission (ERC) has granted a five-month extension of the gas power supply contract between Manila Electric Co. (Meralco) and First Gen Corp., citing its role in supporting energy security, particularly with the summer months approaching.
In an eight-page order promulgated on Jan. 30, the ERC approved the joint motion filed by Meralco and First Gen unit First Gas Power Corp. (FGPC) to continue sourcing power from the Sta. Rita gas-fired power plant in Batangas until June 25, 2026.
The approval of the second interim extension comes ahead of the Jan. 31 expiration of the previous temporary extension of the 25-year power purchase agreement.
The ERC said the renewed arrangement will be implemented under the same terms and conditions as the earlier extension and will remain a pass-through charge to Meralco customers.
In approving the extension, the ERC reiterated that spot market prices could increase by around twofold if the Sta. Rita plant were to operate as a merchant plant, citing simulations conducted by the Independent Electricity Market Operator of the Philippines.
FGPC said it would likely be constrained to shut down the power plant due to the loss of offtake. This could, in turn, compel the Malampaya gas field operations and the liquefied natural gas terminal to cease operations because of “technical interdependencies” among the facilities.
“This situation presents a critical energy security risk in the Luzon Grid with dire consequences extending beyond power rate increases to rotating power outages that would disrupt household, business, and industrial activities,” the ERC said.
The agency also noted the Sta. Rita plant’s contribution to energy security through the frequent operation of its available units at full capacity, helping increase supply and stabilize spot prices.
“The Commission is cognizant that the reliable and flexible capacity offered by the Sta. Rita Plant is much needed during the summer months,” the ERC said.
“It is thus imperative that the power grids maintain sufficient capacity available to avert yellow/red alerts, power interruptions, or worse, widespread outage.”
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.
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