RTC declares Meralco, Napocor deal valid

The Regional Trial Court of Pasig City has declared as “valid and binding” the P14-billion settlement agreement between power distributor Manila Electric Co. (Meralco) and state-run National Power Corp. (Napocor).

“The court’s decision paves the way for the resumption of proceedings on the joint application of Napocor and Meralco currently pending at the Energy Regulatory Commission,” Meralco said in a text message.

What this ruling means, according to ERC executive director Francis Saturnino Juan, is that Meralco will be able to again file a petition to recover the P14 billion from its over five million customers.

In a previous filing with the ERC, this amount was supposed to be collected in the form of an additional charge of 12 centavos per kilowatt hour (kWh).

Juan said, however, that the decision of the RTC is still subject to appeal.

To recall, the Office of Solicitor General wanted the P14-billion settlement agreement between Napocor and Meralco declared null and void, claiming that the settlement ran “contrary to law, morals, and public policy,” specifically its pass-on provision, which would put an additional burden of 12 centavos per kilowatt hour on consumers.

Meralco and Napocor signed the settlement agreement in 2003, and was prompted by Meralco’s failure to buy the electricity that it had contracted to purchase from the state-run firm.

Napocor claimed that it had incurred contractual obligations with its own independent power producers (IPPs) because of expectations it would supply the power needed by Meralco under the 10-year contract.

Thus, it sought financial considerations to cover for the failure to buy the contracted electricity.

The settlement was initially pegged at P52 billion, but this was eventually reduced to P20 billion. Napocor and Meralco had then petitioned the ERC to approve this agreement.

As of 2006, the settlement amount was pegged at P14.3 billion.