Meralco seeks to extend contract with Napocor

Manila Electric Co., the country’s biggest power distributor, is seeking to extend by another six months its existing transition supply contract (TSC) with state-run National Power Corp. to secure adequate power supply in its franchise area.

Alfredo S. Panlilio, SVP for customer retail services of Meralco, explained that while the power utility firm had already secured some 4,800 megawatts of electricity supply from various power generation firms, it would still need about 200 MW from Napocor over the next six months, or up to the time when the open access and retail competition scheme would commence.

Under the open access regime, large power users that consume 1 MW or more each month will be able to choose their own electricity suppliers, unlike in the current setup where they are limited to the supplier that has jurisdiction over their respective areas.

The transition supply contract with Napocor will expire on Dec. 25 this year. If the parties will be able to agree on the proposed extension, the contract will expire on June 25, 2013.

“We’re trying to extend the TSC to lessen our exposure to the [wholesale electricity spot market],” he added.

Panlilio assured Meralco’s estimated 5 million customers that the contract extension would entail no additional cost to Napocor and state-run Power Sector Assets and Liabilities Management Corp. (PSALM) as the extended contract would have the same terms as the existing one.

Meralco earlier said that its new power supply agreements would enable it to reduce the generation charge—the largest component of a power bill—by an average of 18 centavos per kilowatt-hour starting 2013.

The new power supply agreements, together with Meralco’s other bilateral contracts, account for about 95 percent of the requirements of Meralco customers in 2013. The remaining 5 percent will have to be sourced from WESM.

It is expected that the average blended power rates from both Meralco’s existing and new power supply contracts are expected to reach P5 a kilowatt-hour (kWh) next year and in 2014; P5.04 per kWh in 2015; P5.07 per kWH in 2016; P5.08 per kWh in 2017; P5.10 per kWh in 2018; and P5.13 per kWh in 2019.

The rates are still much lower than the P5.65-per-kWh offered under the company’s existing transition supply contracts with Napocor.