Meralco debunks Enrile’s ‘sweetheart deal’ charges

The Manila Electric Co. (Meralco) said yesterday it is not passing on costs higher than the present National Power Corp. (Napocor) grid rate and has not entered into any "sweetheart deal" with First Gas Power Corp. contrary to the allegations of Sen. Juan Ponce Enrile.

"We welcome Sen. Enrile’s inquiry into the matter. However, we fear that the good senator, who is an expert in commercial law, is being misled by certain sectors by feeding him half-truths and wrong information. In fact, if he will look at Meralco’s electric bills closely, he will see that we have not passed on to our consumers any cost of our IPPs (independent power producers) above the Napocor grid rate," said Meralco treasurer Rafael L. Andrada.

In a statement, Meralco said its purchased power adjustment (PPA) cost is only P2.08/kwh inclusive of the two percent franchise tax and system loss of 9.5 percent. The combined cost of the franchise tax and system loss is about P0.26/kwh. "Thus, deducting this P0.26/kwh from the P2.08/kwh registered in the bill, the actual PPA component is P1.82/kwh," Meralco said.

"To compute the total costs of generation purchased by Meralco from Napocor and its own IPPs, there is a basic rate of P1.784/kwh. Thus, if you add the PPA cost of P1.82/kwh and the basic rate of P1.784, the cost of generation is P3.604/kwh. This is well within Napocor’s current grid rate of P3.5906/kwh," Meralco added.

"To ensure the optimization of all generating plants and transmission systems, Meralco and Napocor entered into an agreement which would result in the least cost to all consumers," Andrada added.

"The twin goals of this compromise agreement is to assure that all contractual commitments are honored and that the consumer is supplied with electricity at the lowest cost possible given the present circumstances," Jesus Alcordo, Napocor president, said.

"Contrary to the claim of Senator Enrile, First Gas Power tested its power plant January 2000 and began full commercial operation August 2000. In fact, its operation helped stabilize the country’s power supply during the recent blackout in April 7, 2001," according to Andrada. It was also pointed out that natural gas from the Malampaya field will start flowing before the end of this year and not in 2004 as also claimed by Enrile.

In effect, the Sta. Rita power plant will usher in the start of the country’s natural gas industry. Governmment will earn about $6 to 7 billion in royalties for the first seven years from the Malampaya gas project.

This dream of harnessing the country’s natural gas from the deep waters of Palawan could not have been realized if the private sector led by Meralco and First Philippine Holdings Corp. did not take the challenge, which the government under President Fidel Ramos offered in 1994, the power distributor said.