ERC provisionally approves NPC-MERALCO TSC

The Energy Regulatory Commission (ERC) granted on January 10, 2007 provisional approval to the Transition Supply Contract (TSC) between National Power Corporation (NPC) and Manila Electric Company (MERALCO). The TSC, which covers a five-year contract term commencing 17 November 2006 until 2011, guarantees MERALCO and its electricity consumers with a power supply of 6,600 GWh (gigawatt-hours) per year for the next five (5) years. The TSC, however, will automatically expire at the end of the first year of existence of open access. Moreover, the MERALCO consumers will benefit from a stable electricity price and power supply under a competitive environment.

“This is another significant milestone in the power reforms of the EPIRA (Electric Power Industry Reform Act) considering that said approved TSC will help protect the MERALCO customers against price fluctuations of the WESM (Wholesale Electricity Spot Market),” ERC Chairman and CEO Rodolfo B. Albano, Jr. stressed.

The TSC charges and adjustments will be based on the ERC-approved NPC TOU (time-of-use) generation rates. MERALCO, at its option, may source power from NPC in excess of the contract energy by not more than 20% thereof. Any excess consumption will make MERALCO pay NPC an additional premium over and above the agreed contract energy charge plus other adjustments.

The ERC will issue its final approval on the NPC-MERALCO TSC upon completion of final evaluation and public hearings thereon. “With the ERC’s provisional approval on the NPC-MERALCO’s TSC, consumers may expect more stable rates as the guaranteed power supply by NPC will mean less exposure to price volatilities in the competitive market,” Chairman Albano asserted.

January 24, 2007