Napocor asked to submit contract with Meralco

The Energy Regulatory Commission (ERC) has issued an order for the National Power Corp. (Napocor) to submit the transition supply contract (TSC) with the Manila Electric Co. (Meralco).

ERC energy regulation officer Alma Clemente, in an interview, said as part of the standard procedure of the regulatory body, it has to issue an order to remind the Napocor of the mandate of the new power law.

"Definitely, we have to issue an order. They have to comply with the law particularly on the submission of the TSC," Clemente said.

Napocor is required to submit a TSC with 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.

Last August, Napocor submitted its application for a TSC with 28 distribution utilities with the ERC. But the 28 TSCs did not include the controversial TSC with Meralco.

Of the 28 TSCs submitted to the ERC, about 18 came from Luzon, four from Visayas and six from Mindanao.

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

The ERC had earlier given Napocor up to September 2002 to file the TSCs with distribution utilities.

Of these TSCs, the most crucial would be that with the Meralco which has been on negotiating table since September last year.

The dispute on the TSC stemmed from the existence of a 10-year supply contract between Napocor and Meralco which will expire in 2004.

Under the 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 sourced 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 Napocor argued that the Lopez-controlled firm should adhere to the contract until it lapses two years from now.

The TSCs are designed to allow the new buyers of the generation assets of Napocor to have 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 a TSC. Under the EPIRA, the TSCs shall be assignable to the Napocor successor generation companies.