AMID its recent move to increase the volume of electricity it sources from the National Power Corp. (Napocor), Manila Electric Co. (Meralco) is being urged to contract more of its electricity from the state-run power generator to protect its customers from volatilities in the price of electricity at the spot market.

A source, who requested anonymity, told BusinessMirror that he urged Meralco to smoothen its power rates by getting more of its requirements from Napocor, rather than have a fluctuating rate due to the volatility of prices at the Wholesale Electricity Spot Market (WESM).

“But they [Meralco] prefer to make customers adjust to volatility that’s brought about by their large exposure at the WESM in July,” the source said in a phone interview.

Meralco, according to the source, should take responsibility in protecting more of its customers by getting more of its requirements from Napocor.

Meralco in July signed an additional agreement that will increase its contracted volume with respect to its supply contract with the Napocor.

The additional agreement to the supply contract increases the original annual contract energy volume of 6,646 gigawatt-hours by 1,020 gigawatt-hours to address the load growth of Meralco that was not considered in the original supply contract.

In November last year, Meralco and Napocor entered into a supply contract with an annual contract energy volume of 6,646 gigawatt-hours, based on Napocor’s time-of-use rates and any Energy Regulatory Commission-approved deferred accounting adjustments.

Meralco sourced 30 percent of its power requirements from Napocor from January to June and around 35 percent from its independent power producers, and the rest from the WESM.

The supply contract has a term of five years, with automatic termination one year after implementation of open access and retail competition.

Meralco officials said the increase in volume will redound to the benefit of consumers in terms of cheaper cost of power, while at the same time facilitate the privatization of Napocor power plants by making them more attractive to prospective bidders.

Meralco earlier said it would heed the suggestion of former Energy Secretary Raphael P.M. Lotilla for Meralco to source more of its power requirements from the Napocor.

“This is specifically the reason why we formalized our discussions with Napocor regarding our proposal to increase the contracted energy under the Napocor-Meralco supply contract,” said Meralco vice president for corporate communication Elpi O. Cuna.

The Meralco official reiterated its support for the government’s efforts in privatizing state-owned generation plants.

Meralco said that for the month of June, as in the previous supply months, Meralco was obtaining a greater portion of its power requirements from Napocor than the WESM.

The higher dispatch of Meralco independent power producers has also significantly lowered its overall generation cost.

“Meralco has always taken into consideration how increasing or decreasing the amount of power we obtain from any one source would ultimately impact on the bills of our customers,” Cuna said.

Lotilla, on the other hand, earlier said that an increase in Meralco’s contracted volumes from Napocor will help the latter and the Power Sector Assets and Liabilities Management Corp. (PSALM) attach a higher level of transition supply contract to certain power plants that are set to be bid out.

“I have even always reminded distribution utilities to enter into bilateral contract with Napocor, and I will continue to preach that,” said Lotilla.

The former energy chief pointed out that the ideal situation is to really have as high a level of contracted capacity as possible and then have that assigned to the plants.

“But for as long as the distribution utilities do not provide such contracts, then generators will end up without contracted capacity from distribution utilities,” he added.

He added that increasing Meralco’s contracted levels would address the exposure of Meralco customers to the volatility of the spot market.

“I would rather that Meralco signs up to 100 percent in contracted levels with Napocor, considering that the 10 percent from the WESM will provide for the imbalances and all of its captive market adequately protected from price shocks,” Lotilla said.

AMID its recent move to increase the volume of electricity it sources from the National Power Corp. (Napocor), Manila Electric Co. (Meralco) is being urged to contract more of its electricity from the state-run power generator to protect its customers from volatilities in the price of electricity at the spot market.

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