Meralco hikes supply deal with Napocor

Manila Electric Co. (Meralco) will source an additional 15 percent or 1,020 gigawatthours (gwh) of power from the state-run National Power Corp. (Napocor).

The new supply volume to be sourced by Meralco from Napocor was contained in the addendum to an earlier signed transition supply contract (TSC) between the two power firms.

The TSC signed on Nov. 16 last year, calls for the supply of power to Meralco, the country’s largest power distributor, originally at an annual contract energy volume of 6,646 gigawatthours based on Napocor’s time-of-use (TOU) rates plus any deferred accounting adjustments.

The supply agreement has a term of five years with an automatic termination clause one year after the implementation of open access and retail competition.

The addendum, which increases the original annual contract energy volume, is seen to address the load growth of Meralco that was not considered in the original TSC.

Meralco said the increase in volume will redound to the benefit of consumers as this will result in cheaper power costs.

Meralco added that the increased power to be sourced from Napocor will also help facilitate the privatization of Napocor’s power plants by making them more attractive to prospective bidders.

In an earlier press statement, Meralco said it would heed the suggestion of Energy Secretary Raphael Lotilla to source more of its power requirements from Napocor.

“This is specifically the reason why we formalized our discussions with Napocor regarding our proposal to increase the contract energy under the Napocor-Meralco TSC,” Meralco vice president for corporate communication Elpi Cuna said.

“We reiterate our support to the government’s efforts in privatizing state-owned generation plants,” he added.

Meralco said that for the month of June, as in the previous supply months, Meralco was obtaining a greater portion of its power requirements from Napocor than the wholesale electricity spot market (WESM).

The Lopez-controlled power utility said the higher dispatch of its independent power producers (IPPs) has also significantly lowered Meralco’s overall generation cost.

“Meralco has always taken into consideration how increasing or decreasing the amount of power we obtain from any one source would ultimately impact on the bills of our customers,” Cuna said.