Meralco mulls new supply deal with Napocor

To comply with Energy Regulatory Commission’s order, power distributor Manila Electric Co. (Meralco) is exploring the possibility of entering into an agreement with state-owned National Power Corp. (Napocor) for an increased supply contract in 2009.

Meralco president Jesus Francisco admitted that though they have not yet firmed up the exact level of power demand for next year, they already initiated talks with Napocor.

“We cannot project sales for next year. Well, we have numbers but we don’t know if it will be met,” he added.

At present, Meralco sources at least 40 percent of its supply requirement from Napocor; 50 percent from its independent power producers and 10 percent from the wholesale eletricity spot market (WESM).

“As far as I know we’re already meeting with NPC for the possibility of increasing our volume,” Francisco said.

The Meralco official, however, did not specify by how much the company may potentially increase its contracted volume under its transition supply contract (TSC) with Napocor.

Meralco was given up to 30 days to comply to an order issued by the ERC early this month.

In that ERC order, Meralco was directed to negotiate with Napocor for an increase in contracted volume.

But the Meralco official noted that it may take time for them to negotiate with Napocor.

“A distribution utility like Meralco has contractual obligations. Our problem is if we buy from Napocor through a TSC our volume is already fixed we cannot lower it anymore while energy demand is seasonal. So there is a risk if you get from a TSC that a DU without IPPs does not have,” he said.

But Francisco said they would definitely comply with the ERC order but could not promise the turn out of discussion of Napocor.

“Depending on the talks, maybe our concerns maybe addressed by Napocor,” he added.

The ERC promulgated on Dec. 10, 2008 its Decision in ERC Case No. 2008-016 RC on the Bureau of Trade Regulation and Consumer Protection –Department of Trade and Industry’s petition to direct Meralco to purchase its power requirements from the Wholesale Electricity Spot Market (WESM) during off-peak hours was denied.