Napocor, Meralco file jt application for P20-B power supply settlement

The National Power Corp. (Napocor) and the Manila Electric Co. (Meralco) have submitted to the Energy Regulatory Commission (ERC) last week their joint application for their P20.05-billion power supply settlement agreement.

At the same time, the consumer group National Association of Electricity Consumers for Reforms (Nasecore) said it is set to file its formal opposition to the joint application, which it said is a clear violation of contract on the part of Meralco.

"We will fight this settlement agreement in the ERC and even up to the Supreme Court, if necessary. Meralco unilaterally violated its contract with Napocor and it is only proper that the Lopez-managed utility firm should pay the penalty imposed by Napocor. To pass this cost of penalty to the consumers is utterly unconscionable," Nasecore president Pete Ilagan said over the weekend.

Ilagan noted that based on the power firms’ settlement agreement which was executed on July 2003, Meralco will compensate Napocor P27.515 billion for the electricity it contracted but failed to purchase from the government-owned power corporation.

On the other hand, Napocor will pay Meralco P7.465 billion for the delayed completion of transmission facilities as well as the energy corresponding to Napocor’s sales to directly-connected customers located in Meralco’s existing franchise area.

The net amount payable by Meralco to Napocor is P20.05 billion, which both parties agreed will be passed on to customers within a five-year or six-year period.

Ilagan said under the joint application, the P20.05-billion pass-on cost to consumers will translate to about 12 centavos per kilowatt-hour (kwh). The application, he said, also claims that the settlement agreement will allow the operation of Meralco’s independent power producers (IPPs) at their respective contracted levels or minimum energy quantities (MEQ) which will result to an estimated 25-centavo reduction in Meralco’s purchased power cost.

Thus, the estimated net effect to Meralco’s customers would be a reduction of P0.13/kwh in the cost of electricity. "We welcome the 25-centavo reduction as a result of the operation of Meralco IPPs at their MEQ level. What we are against is allowing Meralco to pass on to its customers the cost of violating its contract with Napocor," Ilagan said.

He added: "If Meralco only bought the power it contracted with Napocor and sold it to its customers then it would have save itself from this P 20.5-billion penalty. The ERC has asked the two power firms to file a joint application so that the resolution of the case will be easier for the commission."