TransCo’s P7-B claim part of deal with Napocor — Meralco

The Manila Electric Co. (Meralco) clarified yesterday that the National Transmission Corp.’s (Transco) claim for unsettled transmission charges is already part of the settlement agreement between Meralco and the National Power Corp (Napocor).

Meralco also said TransCo’s P7-billion claim is inaccurate.

"We were surprised to read the news report. First, TransCo’s demand letter dated June 19, 2006 was for a much lower amount of P5.66 billion and not P7 billion as reported. Second, P5.62 billion or 99 percent of the stated amount of P5.66 billion is already incorporated in the settlement agreement we signed with Napocor on July 15, 2003. That agreement covers not only generation costs but transmission costs too," Meralco vice president for corporate communication Elpi Cuña Jr. said.

He said when the company entered into a supply contract with Napocor in 1994, the purchase of power included both generation and transmission costs as Napocor then was handling both functions. "It then simply follows that the settlement agreement covers both these costs."

He added that TransCo was created in 2001 through the Electric Power Industry Reform Act (EPIRA) to assume the electrical transmission functions of the Napocor in the major Philippine grids.

TransCo, in its June 19 letter, said while it was "aware of the pending case with the Energy Regulatory Commission (ERC) regarding the settlement agreement with Napocor on the ancillary service charge relative to the contracted demand and energy shortfall", it had to handle the account in accordance with its credit and collection policies.

"We cannot understand why TransCo is pushing for the collection of these amounts now considering that it is fully aware that the settlement agreement is still pending at the ERC," Cuña said.

The settlement agreement was jointly filed at the ERC by Napocor and Meralco on April 15, 2004.

Cuña noted that TransCo was a signatory to the amendatory dispatch agreement that was included in the joint petition.

In a joint compliance to the ERC, Napocor and Meralco submitted that the net settlement amount has been reduced from P20.05 billion to P14.3 billion following higher Meralco purchases from Napocor from July 2003 to December 2004.