Meralco, Napocor finally end dispute

With just the minor details and computations left to resolve, the dispute between the Manila Electric Co. (Meralco) and the National Power Corp. (Napocor) has finally come to a happy conclusion.

"We have agreed," said Asisclo T. Gonzaga, Napocor senior vice president and chief operating officer.

Gonzaga’s pronouncement was made after a meeting Saturday morning between senior representatives of both parties held a day after power was fully restored in Luzon. Last Friday, Metro Manila and Southern Luzon were without electricity when Napocor’s San Jose, Bulacan substation broke down subsequently tripping the 500-kilovolt transmission lines running between Bulacan and the San Miguel, Pangasinan substation.

Napocor president Federico E. Puno headed the government panel while the Meralco panel was headed by board director Christian Monsod and executive vice president/chief operating officer Jesus P. Francisco.

As earlier stated, they have agreed to a revenue neutral power supply scheme that will result in both parties ‘sacrificing’ profits to accommodate each other’s requirements while ensuring that the endusers do not get penalized by any rate adjustments.

"By being cooperative and economical in our proceedings, we expect to also lower our expenses in the purchase and utilization of imported petroleum products by maximizing power plants run by energy sources like coal, steam, and natural gas," officials privy to the Oct. 21 meeting revealed.

Monsod said after the meeting that they will just be ‘putting flesh’ or detailing the working mechanism into the agreements.

"We are in agreement with earlier statements made by (Napocor) president Puno, and we are just putting flesh to the details of the agreement. We will issue a joint statement on Monday or Tuesday," the Meralco director told The STAR.

Francisco said that they would still be making the final computations for the revenue side over the weekend. "We will be making the final computations before Monday which will result in positive gains not only for both parties but also the endusers," he added.

Meralco has dropped its demand that Napocor allow electricity from the former’s independent power producers (IPPs) to pass through its transmission lines and substations.

They have agreed to a principle of economic dispatch wherein they would set a fixed cost on the power generated from the more economical and efficient power plants from Napocor’s IPPs. The two parties will then share the cost of utilizing the power much similar to the One-Day Power Sales (ODPs) scheme.

Napocor’s ODPS scheme utilizes excess power generated by Napocor’s IPPs sold at discounted rates or rates lower than its basic power rates. Meralco is one of the many utility companies that enroll in the power sale scheme.

"We will share the burden from the fixed cost by tapping our more efficient and economical power plants like coal and steam. That will result in lower or unchanged rates paid by the customers or endusers," Gonzaga said. "It will also result in Meralco buying power from us in excess of the contracted capacity."

Under the 10-year power supply contract, Meralco will buy 3,600-megawatts of electricity from Napocor. With the commissioning of two of Meralco’s IPPs, the Lopez-run utility company wanted to reduce its contract electricity to just 2,400 MW.

The settlement of the Napocor and Meralco row will likewise pave the way for the payment by the latter of its remaining P684-million contractual obligation to the former covering the periods June 26 to July 24. Earlier, the country’s largest utility company paid P690 million for electricity bought from Napocor in the period of July 25 to August 24 after the government-run corporation threatened to cut power feed to Meralco.

Last week, Francisco told newsmen that they would push for the settlement of their impasse within two weeks. Francisco said that a settlement within the month would pave the way for their payment of the remaining P684-million obligation to Napocor.

Its original backlog was P1.374 billion, which forced the government-run corporation to threaten an issuance of a notice of disconnection unless the private utility company pass within seven days of notice.

Meralco’s IPPs are the 1,000-megawatt (MW) Sta. Rita combined cycle power plant in Batangas and the 400-MW coal-fired Quezon Power Philippines Ltd. (QPPL) power plant in Mauban, Quezon.