Meralco contracts with IPPs are private - ERC jurisdiction is limited to rate review

ERC Chairman Manuel R. Sanchez said that “the Commission cannot cancel outright the purchase power contracts of Manila Electric Company (Meralco) with its independent power producers (IPPs); namely, First Gas Power Corporation (FGPC) and Quezon Power Limited (QPL).”

“These are private contracts between Meralco and the IPPs. ERC’s authority over these contracts is limited to review of rates to be recovered from end-users,” Sanchez noted.

Sanchez issued this statement in answer to the demand of the National Association of Electricity Consumers for Reforms (NASECORE) for ERC to cancel said contracts.

The above consumer group claims that “…despite its (Meralco) renegotiation with FGPC and QPL, the power generated from the two private IPPs are still more expensive than those from the government-run National Power Corporation (Napocor).”

NASECORE president Pete Ilagan stressed that “if FGPC and QPL cannot lower their power rates to the level of Napocor rates then the ERC should withdraw its approval to these contracts. The ERC can motu propio do this under the Electric Power Industry Reform Act.”

The ERC chief further clarified that “the purchased power contracts were properly approved by the then ERB in accordance with its rules and regulations. Thus, any action to question the validity of said contracts should be done in accordance with ERC’s rules and regulations. A formal pleading should be filed to this effect to give Meralco and the petitioner a chance to be heard and for the Commission to be given a reasonable basis for its action.”

September 11, 2003