Napocor says no double-charging Meralco for transmission losses

MANILA, Philippines - State-owned National Power Corp. (Napocor) clarified yesterday it did not double-charge Manila Electric Co. for transmission line losses arising from the latter’s participation in the Wholesale Electricity Spot Market (WESM).

Napocor  corporate communication division manager Dennis S. Gana, in a statement, pointed out that the transmission line costs Napocor collects from Meralco are stipulated under the two parties’ transition supply contract (TSC).

Aside from the TSC provision, however, the collection of transmission line costs from WESM registered members like Meralco is also allowed under the pricing methodology approved by the Energy Regulatory Commission (ERC) for the Philippine Electricity Market Corp., (PEMC), which operates the WESM.

“The allegations of double-charging may have stemmed from the overlapping of the approval of the Napocor-time of-use rates as provided for in the Napocor Meralco TSC, and the ERC approved pricing methodology of WESM,” Gana said. 

“But the costs we are charging Meralco are explicit in, and in accordance with, our TSC with them.”

Napocor was reacting to news reports regarding ERC’s recent decision on a case filed by Meralco in connection with Napocor’s alleged “double-charging” of transmission line costs.

At any rate, Napocor welcomed the ERC’s decision, saying this will allow it to also collect line rentals from distribution utilities that are indirectly participating in the spot market but are not directly registered with PEMC and are, instead, under the account of Napocor/PSALM, being their generators.

“At present, Napocor is also absorbing the actual, hourly WESM line losses embedded in the said line rental charges associated with the basic contract quantities declared for these distribution utilities, and these line rentals translate to a significant amount. With the ERC directive, we can collect from these market players any line losses exceeding the average 2.98 percent-level allowed by the ERC in Luzon. Conversely, we can also refund them should the system losses be below 2.98 percent,” Gana said.

In its decision, the ERC said that: “ . . . if the line rental transmission loss component is more than the 2.98 percent transmission loss cost in the Napocor-TOU, Napocor should bill the distribution utility or any party with a contract with Napocor the incremental adjustment to reflect the actual transmission line cost. On the other hand, Napocor should implement a refund if actual transmission line loss is less than the 2.98 percent loss factor.”

Earlier, the ERC has embedded a 2.98 percent transmission line loss charge, which are already paid for by WESM’s buyers.

This is the cost of power lost through transmission facilities that power generators are allowed to absorb. Losses in excess of which are, in turn, paid for by distribution utilities.

The petition against the double charging was filed by the Meralco, which argued that the state-run power firm should refund the transmission line losses it collected from WESM participants from the start of the spot market’s operations in 2006.

“Meralco is charged for the 2.98 percent line loss and at the same time subjected to actual transmission line losses thru line rentals for its TSC quantities,” the ERC said.

The ERC also ordered Napocor to refund or collect from WESM participants like Meralco any ensuing adjustment as a result of the line loss adjustment.