The ERC said the new dispatch scheme will replace the economic dispatch protocol (EDP) earlier imposed by the commission.
The ERC order recognized Meralco’s and the National Power Corp.’s arguments contained in their respective motion for reconsideration filed last Feb. 9, 2006 that the previous dispatch system under EDP is "counter-productive".
"After a diligent review of the arguments of both parties in this case, there is concrete showing that despite earnest efforts at arriving at a solution to the dispute relative to the execution of the TSC (transition supply contract) between Napocor and Meralco by way of the implementation of the EDP and other solutions station in the Nov. 7, 2005 and Dec. 15, 2005, decision and order, respectively, these did not afford both parties the best resolution to the problem," the ERC said.
The EDP should have become the basis for a TSC between Napocor and Meralco as provided for under Sec. 67 of Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA).
The TSC is designed to allow the new buyers of the generation assets of Napocor a ready market once it is privatized. Most of the potential investors of Napocor’s privatization have indicated that they would prefer to buy a generation company with TSC. Under the EPIRA, the TSCs shall be assignable to the Napocor successor generation companies.
Aside from allowing Meralco’s IPPs to run at contracted volumes or at minimum energy quantity (MEQ), the ERC said Napocor "shall supply the balance of Meralco’s energy requirements and less any volume supplied by privatized generation assets of the state-run power generation company under the ERC approved power purchase agreement."
Meralco has claimed that if its IPPs would be run at MEQ or at 83-85 percent, its customers could enjoy a 37-centavo per kilowatthour (kWh) savings in their electricity rates.
Meralco’s IPPs include First Gen Corp.’s Sta. Rita and San Lorenzo power plants, Quezon Power Phils. Ltd. and Duracom Power.
The ERC said the new dispatch rule would also result in an efficient provision of electric power to Meralco’s captive market.
The country’s power sector regulator said this manner of dispatch shall take effect immediately and shall be effective until otherwise modified by the commission.
With this new dispatch arrangement, the ERC has also temporarily suspended the deadline for the power firms to execute a TSC which was supposed to be on April 25 this year.
"Accordingly, the requirement for Napocor and Meralco to execute a TSC by the deadline given is hereby held in abeyance," the ERC said.
But the ERC pointed out that newly-approved dispatch system should "not prevent Meralco from taking lower cost electricity from privatized ex-Napocor generation sources that will benefit Meralco’s end-users."
Napocor and Meralco were supposed to submit their duly executed TSC on or before Jan. 20, 2006 but they sought a three-month extension due to unresolved differences on the level or volume of dispatch.