Meralco sets condition
Tuesday, April 04, 2006
The Manila Electric Co. (Meralco) cannot immediately allow its large industrial and commercial customers with a minimum demand of one megawatt to switch to other power suppliers they prefer.
It is still waiting for the government to agree to a condition it had attached to the offer it gave.
Meralco, the biggest power distributor in the Philippines, had offered to let its large commercial and industrial clients—with a demand of at least one MW—to find their own suppliers in the spirit of open market access and to help bring down the cost of electricity in the country.
Cheaper costs of electricity for business and industry would spur more commercial and industrial activity here and attract more foreign investors to set up factories in the Philippines.
Last week, Malacañang instructed the National Power Corp. (Napocor) and the National Transmission Corp. (Transco) to come up with the mechanics of implementation within two weeks, subject to the approval of the Energy Regulatory Commission.
Unconditional after all
Reports about Meralco’s offer said it is “unconditional.” It now turns out that it is not unconditional after all. Meralco is asking the government to have its independent power producers [IPPs], including its sister firm, First Gas Power Corp. [FGPC], to be “dispatched on maximum energy quantity [MEQ] level.”
“Dispatch” in this case means “supply or ship” and MEQ is the level at which a power plant becomes more cost-efficient. This condition by Meralco will surely delay the implementation of the offer. It is that very issue that has delayed the signing of a supply-contract agreement between Meralco and Napocor.
Napocor and Meralco have been trying to sign a transition supply contract that would ensure a ready market for the power plants of the state-owned power firm once open retail competition starts.
Differences in dispatch levels
But they cannot agree, owing to their differences in dispatch levels. Meralco is reportedly asking the government to have the natural-gas plants of FGPC dispatched on the MEQ, level which is 83 percent for the 1,000-MW Santa Rita and 86 percent for the 500-MW San Lorenzo plant.
Napocor, however, is only amenable to the 53-percent dispatch of Meralco IPPs.
The National Association of Electricity Consumers for Reforms (Nasecore) warned against the possible tradeoffs to be solicited by Meralco from the government. Nasecore is questioning the timing of Meralco’s offer because it is in the middle of a P14-billion settlement agreement with Napocor for its failure to source the amount of energy specified in the supply contract between the two parties.
“We hope there will be no tradeoffs that will be disadvantageous to the consumers,” Pete Ilagan, president of Nasecore, said. Ilagan also cautioned the government against submitting to Meralco’s demand for MEQ dispatch, noting that it would affect electric rates.
Nasecore cited studies conducted by Transco showing that electric rates will only be cheaper if Meralco IPPs dispatch at 53 percent combined with the power it buys from Napocor.--Neil Mugas
posted by philpower @ 6:53 AM,
