Meralco, power producers agree on settlement scheme

By Lenie Lectura, BusinessMirror

Posted at Feb 28 2014 08:35 AM | Updated as of Feb 28 2014 04:35 PM

MANILA -- The Manila Electric Co. (Meralco) and 12 power producers have come to an agreement on how to settle the P7 billion worth of unpaid power purchased from the Wholesale Electricity Spot Market (WESM).

“They negotiated. Around 12 gencos [generation companies] have joined in the negotiation. They agreed on a six-month payment. Meralco said there will be brownout if it can’t pay the gencos. I told Meralco to negotiate with the gencos and [Meralco] has a long-term relationship with the gencos, so there is no reason for a brownout to occur,” Energy Secretary Carlos Jericho L. Petilla said.

 Meralco was unable to pay some of the gencos last year because the Supreme Court issued a temporary restraining order against the implementation of the utility firm’s P4.15 per kilowatt-hour (kWh) increase.

 “Basically, they have payment terms, six months to pay. It’s a special payment agreement. Not all gencos, only those affected by WESM and only those who agreed, because the others decided not to join,” Petilla said.

 Petilla said the special payment agreement covers the P7-billion unpaid fees to WESM for January.

 Meanwhile, Petilla urged the Energy Regulatory Commission (ERC) to issue a ruling with regard to the correct pricing for the WESM charges. “We gave ERC the info…most likely they will decide on a proper rate, but it doesn’t mean that they will stop their investigation,” Petilla said.

 Average electricity charges at the WESM went up to P36.0846 per kWH in December and P33.2160 per kWh in November during the maintenance shutdown of the Malampaya facility.

 The higher WESM prices resulted to a generation-rate increase of P2.42 per kWh in Meralco’s generation charges for November, and P3.60 for the December billing month, which is reflected in the December and January bills of consumers.