ERC gives Napocor, Meralco more time to resolve row

The Energy Regulatory Commission (ERC) is willing to extend for another three months the deadline for the National Power Corp. (Napocor) to work out a transition supply contract (TSC) with Manila Electric Co. (Meralco).

In an interview, ERC Chairperson Fe Barin said in case the two power firms fail to submit their contract within the prescribed deadline of end-September this year, "they could ask for an extension."

Napocor has submitted to the ERC a list of distribution utilities with which it has TSC, the list contains 28 names but no Meralco.

"We need a complete list. We are already anticipating that they will be asking for an extension given the lack of time to finish all of the TSCs with distribution utilities," Barin said. "But of course, they should present a valid excuse to support their request for an extended deadline."

But Barin said the three-month leeway would be the ultimate deadline. "After this (extension), we have to start penalizing them," she said.

ERC could impose administrative sanctions of P100,000 plus P100 a day for every day of violation for failure to file duly negotiated TSC within the time prescribed by law.

The TSCs shall contain the terms and conditions of supply and a corresponding schedule of rates, consistent with the provision of the Act, including adjustments and/or indexation formulas which shall apply during the term of such contracts.

Under the law, the terms of the TSCs shall not extend beyond one year from the introduction of Open Access which is expected to happen by end-2003.

Napocor and Meralco, however, are still negotiating their TSC. At present, Napocor is apparently still refusing to enter into a TSC with Meralco since the state-owned power firm has an existing 10-year supply contract with the distribution utility which is set to expire on 2004.

The contract requires Meralco to get a minimum of 3,600 megawatt (MW) from Napocor monthly. A corresponding penalty is being slapped on Meralco whenever the minimum requirement is not met. As of March this year, the Napocor’s penalty to Meralco already amounted to P5 billion.

Meralco, on the other hand, argues that the 10-year supply contract with Napocor is already overtaken by events with the passage of the EPIRA.