"The Napocor-Meralco settlement agreement is a breakthrough. It will allow Meralco to draw from its own independent power producers (IPPs) at their contracted capacities. Napocor, for its part, will lower its production from the coal plants. This will reduce power rates by P0.12 per kilowatt hour," he said.
With this settlement in place, Transco can now proceed with the necessary transmission line projects that will ensure the reliability of the country’s "power superhighway."
In recent years, the country had experienced nationwide blackouts not because of a lack of power supply but because of inadequate transmission lines. Thus, even if there were enough power reserves to accommodate any disruption in the system, without the necessary transmission lines, the power reserve could not be transported immediately to cover for such an imbalance.
Nonetheless, Ortiz said that for this year, Transco completed the bidding process for four transmission lines and four substation facilities meant to upgrade Transco’s capability to dispatch electricity. The projects are expected to be completed by 2005 or 2006.
"By that time, when Leyte withdraws 200 to 400 megawatts from Luzon, the BTRP (Batangas Transmission Reinforcement Project) would have been completed, and we would have been able to dispatch the additional capacity from gas-fired plants, thereby sustaining the realibility of the Luzon and Visayas Grids," Ortiz said.
The settlement agreement enables Meralco to buy power from its IPPs – First Gas and Quezon Power – at their contracted levels of 83 and 86 percent, respectively. This will pave the way for a lowering of the present rates by P0.12/kwh to Meralco’s consumers.
Both Meralco and Napocor, and recently, Transco, have reiterated that rates will indeed go down by P0.12/kwh.
Moreover, the settlement is also part of the government’s overall policy to increase the use of indigenous resources and promote environment-friendly fuels like natural gas. At present, the country has three gas-fired plants, all of which are in Batangas – the 1,000-MW Sta. Rita plant, the 500-MW San Lorenzo Plant and the 1,200-MW plant of KEPCO.
Ortiz noted that with the agreement, both Napocor and Meralco can now move on and bury the issues that have hounded the two firms in the past.