Napocor submits 28 supply contracts for ERC approval

The National Power Corp. (Napocor) said it submitted 28 applications for transition supply contracts (TSC) with the Energy Regulatory Commission (ERC) last Aug. 30.

Napocor marketing and commercial department head Maharlika O.A. Ferina said the batch does not include that of the Manila Electric Co. (Meralco).

"We are still negotiating with Meralco," the official said, noting that of the 28 TSCs submitted to the ERC, 18 are from Luzon, four form the Visayas and six from Mindanao.

Ferina said Napocor has signed supplemental agreements with 31 (16 from Luzon, 10 from Visayas and five from Mindanao) distribution utilities. The official said the power firm has yet to firm up TSCs with 30 more distribution utilities.

Napocor is required to submit such contracts with the ERC under Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA).

The power firm, under the power bill, was supposed to file with the ERC for approval TSCs duly negotiated with the distribution utilities within six months from the effectivity of the act or in December 2001.

The ERC has given Napocor up to September this year to file the TSCs with distribution utilities,the most crucial of which is that with Meralco. The two parties have been negotiating since September last year.

The dispute on TSC stemmed from the existence of a 10-year supply contract between Napocor and Meralco which will expire in 2004. Under the said contract, Meralco will source some 3,600 MW of power from Napocor or more than 80 percent of its power supply needs. As of July this year, Meralco has been sourcing only 60 percent of its supply from the state-owned power firm.

Meralco wants the long-term supply agreement to be considered null and void with the passage of the EPIRA but the Napocor argues this is a valid contract that should be honored by the Lopez-controlled firm until it lapses two years from now.

The TSC is designed to allow new buyers of the generation assets of Napocor to have a ready market once it is privatized. Most of the potential investor in Napocor’s privatization have indicated that they would prefer to buy a general company with TSC. Under the EPIRA, the TSCs shall be assignable to the Napocor successor generation companies.