Napocor seeks P1.35-B refund from Mirant Phils

The National Power Corp. (Napocor) is asking Mirant Philippines Corp. to refund about P1.35-billion worth of excess fees paid for the operation and maintenance of the 1,200-megawatt (MW) Sual coal-fired power plant.

In a letter to Mirant executive vice president for operations Thomas Sliman, Napocor’s acting vice president for sales and services Oscar Lorico said they have discovered these claims after reviewing the contract with Mirant, specifically the Energy Conversion Agreement (ECA) and the Power Sharing and Delivery Agreements for the period January 2001 to January 2006.

He said around P629.9-million overpayments were recorded under Mirant’s share in the operations and maintenance (O&M) expenses for electricity sold from volumes above the net contracted capacity from the Sual plant.

Another P602.4 million overpayments were incurred due to back-up power charges for excess energy sales during planned and unplanned outages of one of the units of Sual, he added.

Lorico said some P118.4 million overpayments, on the other hand, were made from September 2001 to December 2004 as Mirant’s share in a power sharing agreement for Republic Cement Corp. (RCC).

But Lorico said they are willing to talk with Mirant to jointly reconcile the accounts for the prompt settlement of the claims.

The Napocor official claimed that based on the ECA, Napocor will pay Mirant fixed operating and service fees both based on the net contracted capacity (NCC) of Sual.

Paul Flake, Mirant Philippines senior vice president, when reached for comment, said they had not yet received the Napocor report and added they would issue a statement after studying the report.

However, Lorico noted that Sual has rarely been dispatched at the level of its NCC. Despite this, Mirant has been selling 200 MW in Sual’s excess NCC to other customers.

"Thus in reality, the 200 MW excess is still within the 1,000 MW capacity of Sual contracted to Napocor and for which Napocor had paid the fixed operating fees and service fees. These fees correspond to the expenses for the operation and maintenance of Sual. Mirant should share in these fees since Mirant was able to reap the benefits of the full price from the sale of this excess capacity by the fixed operating and service fees which were fully shouldered by Napocor," Lorico said.

"It is only proper that Mirant return to Napocor a portion of the energy fees paid corresponding to the electricity generated by Sual and sold to customers other than Napocor," he added.

On the back-up power charges, the Napocor official said when one of the generating units under maintenance suffers a shutdown, whether planned or unplanned, Sual is clearly not in a position to supply the 1,000 MW because the remaining unit cannot provide the net contracted capacity on its own.

"After a review of the operation history of Sual and the power supply arrangements between Mirant and its other customers, we observed that it had unpaid back-up charges," he said.

On the power sharing for RCC, he said additional charges were due from Mirant as a result of the recomputation of Mirant’s share in the energy requirements of RCC.