MANILA, Philippines — Power distribution giant Meralco is calling on the Energy Regulatory Commission (ERC) to fast-track the approval of its power supply agreements (PSAs) with subsidiaries of San Miguel Global Power (SMGP), on Friday, May 15, 2026, Meralco warns that a “swift” green light is essential to securing stable energy costs for millions of consumers through 2027.
The deal involves a total of 1,200 megawatts (MW) of baseload supply, intended to replace aging contracts and shield the grid from the price volatility of the spot market.
The agreements are the result of a successful Competitive Selection Process (CSP) held earlier this year, where San Miguel’s power units emerged as the winning bidders.
- The Supply: The 1,200 MW will be sourced from modern, high-efficiency power plants, including the Limay Power Plant in Bataan and the Sual Power Plant in Pangasinan.
- The Price: Meralco officials noted that the bid prices from San Miguel were significantly lower than the current rates on the Wholesale Electricity Spot Market (WESM), which have been plagued by spikes due to supply alerts.
- The Urgency: With the Luzon Grid currently hitting Red and Yellow Alerts (as reported on May 14), Meralco argues that these contracts provide a vital “buffer” against the surging costs of emergency power.
Meralco’s push for “swift approval” is driven by two main factors:
- Avoiding WESM Volatility: When demand outstrips supply, Meralco is forced to buy power from the WESM. During supply alerts, WESM prices can hit the secondary price cap, leading to higher generation charges for consumers. The San Miguel deal offers a fixed, lower rate.
- Contract Continuity: Several of Meralco’s existing baseload contracts are set to expire by the end of 2026. Without ERC approval of the new deal, there could be a “supply gap” that would leave the distribution utility at the mercy of market fluctuations.
While Meralco is pushing for speed, the ERC is expected to conduct a thorough review to ensure the “least cost” to consumers.
- Rate Impact: The ERC must verify that the fuel pass-through costs and base rates in the San Miguel contracts are fair and transparent.
- Consumer Groups: Some advocates have called for a “line-by-line” audit of the PSA to ensure that the terms do not unfairly pass the risk of fuel price increases onto the monthly electricity bill.
The request comes amid a backdrop of severe power strain:
- NGCP Alerts: The NGCP warned of potential brownouts across Luzon and Visayas on May 14 due to 16 plants being on forced outage.
- Middle East Conflict: Rising global fuel prices have made long-term, fixed-rate contracts like the Meralco-San Miguel deal more attractive to utility companies.
“Every day that these contracts remain pending is a day that our consumers are exposed to the volatility of the spot market. We are hopeful the regulator recognizes the urgency given the current grid situation.” — Meralco Regulatory Management Statement
