ERC settles NPC-MIRANT-ORMECO dispute

The Energy Regulatory Commission (ERC) recently resolved the issue on the classification of the 69 KV transmission line in Mindoro. ERC’s decision resulted in a reduction in wheeling fee and ancillary service charges of the National Power Corporation (NPC) to Mirant (Philippines), an independent power producer (IPP) selling power to Oriental Mindoro Electric Cooperative, Inc. (ORMECO).

Chairman Manuel R. Sanchez said that “the Commission sees to it that all rate complaints submitted to ERC are carefully evaluated.

Based on the contract between NPC-SPUG and Mirant, the charges that will be passed-on by Mirant to ORMECO for use of NPC’s 69 KV transmission line from April to December of 2002 is PhP3.00/kW/day for wheeling fee, and PhP6.58/kW/day for ancillary service.

ERC’s decision on the applicable rate for use of said transmission line resulted in PhP1.1632/kW/day for the wheeling fee from April to September 2002 and PhP0.8558 from October to December 2002, and PhP0.1841 for the ancillary service from April to September 2002 and PhP0.6329 from October to December 2002.

This brings down NPC’s total bill to Mirant for said charges from 3.6 million pesos to about 700 thousand pesos.

For the transmission charge, ERC said that the 69 KV line is the highest voltage level serving NPC-SPUG’s customers in Mindoro. It is not connected to the transmission system and no investment was made by SPUG for transmission network. Initial classification of transmission assets applies to the National Transmission Corporation (TRANSCO) or its Buyer or Concessionaire and does not include NPC-SPUG, thus it can not be construed as a sub-transmission customer to be charged with both transmission and sub-transmission charges.

In determining the ancillary service charge for load following and frequency regulation, ERC corrected the formula used by NPC-SPUG. ERC adopted the billing cycle which NPC commonly uses in billing its customers in computing the maximum load.

For the period January 2003 onwards, ERC ruled that NPC-SPUG shall use the provisionally approved transmission charge in the amount of PhP0.1958/kWh for the wheeling fee and the approved ancillary charge in the Luzon Grid amounting to PhP0.6329/kW/day.

October 02 , 2003