PCC approves New Clark City power distribution deal

MANILA -- The Philippine Competition Commission (PCC) has approved the proposed joint venture between the Bases Conversion and Development Authority (BCDA) and the consortium of Manila Electric Company (Meralco) and its Japanese partners to develop a power distribution system in New Clark City.

“The proposed transaction has been found to not likely result in a substantial lessening of competition in the retail electricity supply market within New Clark City and the distribution utility market of generated electricity through a supply agreement in the Luzon and Visayas grids,” the PCC said in its decision dated June 25 which was released to the media on Wednesday.

The transaction of the BCDA and the Meralco-Marubeni consortium will result in the establishment of a joint venture company that will distribute electricity to the business establishments and facilities in New Clark City for a period of 25 years.

The consortium will have a 90 percent stake with BCDA acquiring 10 percent equity in the company.

The competition watchdog noted that businesses in New Clark City will be able to choose their own power suppliers as “contestable customers”.

“Given the development of New Clark City, the PCC expects an influx of potential locators, particularly agro-industrial and institutional clients, to qualify as contestable customers,” said the PCC.

Contestable customers refer to consumers with an average monthly consumption of at least 750 kilowatts and are deemed by the Department of Energy (DOE) as qualified establishments to participate in its Electricity Open Access Scheme and choose their own retail electricity supplier.

The PCC further said the competitive selection process (CSP) of the DOE will enable other power distribution firms and electric cooperatives to compete with the joint venture company in securing electricity from power generators.

“The antitrust authority views the CSP in securing power supply agreements as important competitive step that would constrain the joint venture’s ability to foreclose other power generation companies,” the commission stated.

The competitive selection process mandates power distribution firms to conduct a public bidding for power supply agreements. This initiative ensures power consumers to select suppliers that can effectively provide affordable electricity.

Last January, the BCDA awarded the Meralco-led consortium the power distribution contract for the New Clark City after it submitted a tariff bid of PHP0.6188 per kilowatt hour (kWh) lower than PHP0.9888/kwh bid by the Aboitiz-KEPCO Consortium comprising the Olongapo Energy Corp. and KEPCO Philippines Holdings Inc. (PR)