‘Meralco’s unsettled penalties now total P56B’

Manila Electric Co. (Meralco) now owes the National Power Corp. (Napocor) about P56 billion in unsettled penalties from its previous supply agreement with the state-owned power firm.

Napocor president Cyril del Callar said the penalties, which initially stood at P20 billion, kept on increasing because of the current auditing rules of the Commission on Audit (COA).

The Meralco receivables accounted for about half of the P111.4-billion customers’ receivables booked by Napocor in 2005.

According to the Napocor chief, the amount already includes the P7-billion receivables of the National Transmission Corp. (TransCo), a company spun off from Napocor to handle its transmission assets.

It was learned that while Napocor and Meralco have already agreed on the P20-billion settlement amount, these receivables will continue to be adjusted and booked in Napocor’s book until after the case is finally settled.

Aside from Meralco, Napocor said these receivables also include the unsettled disputed accounts currently under litigation in local courts or those awaiting final resolution by the Energy Regulatory Commission (ERC) and Supreme Court.

Also booked under this item, Napocor said, are those that are under receivership, rehabilitation or with stay orders from the court.

It would be noted that Napocor and Meralco jointly filed an application for the settlement of unsettled collections arising from their 10-year contract for the sale of electricity (CSE) that lapsed in December 2004.

When the joint agreement was signed in July 2003, the estimated settlement amount initially pegged at P20 billion, net of the P7 billion worth of counter-claims lodged by Meralco.

But the computation of the settlement amount continues to rise after the expiration of the power supply contract, increasing by P14.32 billion as of last year.

Meralco claimed the amount should have been reduced because its level of supply procurement beyond July 2003 had gone up in the succeeding months.

The penalty was an offshoot of the failure of Meralco to meet the required minimum energy requirement prescribed under its 10-year supply contract with Napocor.

Meralco then argued it would not source the 3,600-megawatt or 85-percent power requirement from Napocor because it should have been entering into a transition supply contract (TSC) with the state-run power firm when the Electric Power Industry Reform Act (EPIRA) was signed in 2001. The 10-year supply contract between Meralco and Napocor expired in 2004.

But recently, the two power firms already entered into a five-year TSC, subject for approval by the ERC.

It was not immediately known if Meralco is aware that the penalties from such settlement agreement have already reached this much before it entered into a TSC with Napocor.