THE National Association of Electricity Consumers for Reforms Inc. (Nasecore) has urged the Office of the Solicitor General (OSG) to oppose the settlement agreement entered into between the National Power Corp. (Napocor) and the Manila Electric Co. (Meralco) on the dispute over their 10-year Contract for the Sale of Electricity (CSE) that expired on December 31, 2004.

In a letter addressed to Solicitor General Agnes Devanadera, Nasecore president Pete Ilagan insisted that the Napocor should withdraw from the joint application filed with the Energy Regulatory Commission (ERC) on April 15, 2004, seeking the approval of the settlement agreement.

Nasecore is an intervenor in the case and has been leading the strong opposition to the approval of the settlement agreement, which was signed in 2003.

The consumers’ group has been prodding Napocor to abandon the petition and instead vigorously pursue the collection of its P52-billion receivables from Meralco, representing principal, interest and surcharges on Meralco’s failure to purchase contracted power with Napocor based on their 10-year CSE.

Nasecore has filed several motions with the ERC seeking the dismissal of the application to approve the settlement agreement, but the commission has yet to act on its motion.

In seeking OSG intervention, Nasecore said the government’s chief counsel should review the settlement agreement and intervene in the case pending with the ERC, as the agreement is prejudicial to the interest of the government and electricity consumers.

“We trust that your office will share Nasecore’s position and remain steadfast to its mandate of public service and, thus, grant our request,” Nasecore said in letter received by the OSG on April 21.

Nasecore and the Freedom from Debt Coalition (FDC) are strongly objecting to the settlement agreement, which will allow Meralco to pass on to its over 4 million customers the P20.05-billion agreed settlement amount that Meralco will pay Napocor for its failure to purchase the electricity it contracted.

Nasecore claimed this will result in an additional rate increase in the monthly bills of consumers in the amount of 12- centavos per kilowatt-hour for a period of five to six years.

The agreement, according to Nasecore and the FDC, will give Meralco the right to impose penalties on Napocor for its alleged failure to construct transmission facilities for Meralco’s independent power producers (IPPs), although Napocor is not obligated to build such facilities under the CSE.

The groups also claimed that the settlement agreement will permit Meralco to buy more expensive power from its IPPs—the Lopez-owned First Gas San Lorenzo and First Gas Santa Rita and Quezon Power Philippines Ltd.—and less power from Napocor, a much cheaper source.

“This is a gross violation of Meralco’s obligation to provide the least-cost supply of electricity to its captive customers as expressly provided for in the Electric Power Industry Reform Act [Epira] and in its megafranchise granted by Congress,” the groups said.

Furthermore, the groups insisted the settlement agreement will result in multibillion-peso losses to the government, as Napocor will only charge Meralco P1.51/kWh for every kilowatt-hour that the latter contracted to buy but failed to purchase from the former.

Such price, they noted, is very much lower than the regulator-approved selling price of Napocor.

“The only parties who will benefit from the settlement agreement are Meralco and its stockholders, and Meralco’s IPPs. This one-sided arrangement should be opposed by all consumers and must be rejected by the Energy Regulatory Commission,” they added.

OSG urged: Block NPC-Meralco settlement

THE National Association of Electricity Consumers for Reforms Inc. (Nasecore) has urged the Office of the Solicitor General (OSG) to oppose the settlement agreement entered into between the National Power Corp. (Napocor) and the Manila Electric Co. (Meralco) on the dispute over their 10-year Contract for the Sale of Electricity (CSE) that expired on December 31, 2004.

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