ere we go again,
government spokesmen insisting that Meralco be compelled to stop buying from the
wholesale electricity spot market in order to lower power rates.
The Meralco management is no angel. We saw that already in
the P28 billion it overcharged its customers from 1994 to 1998. In 2002, it
scrapped its 10-year power purchase agreement with the National Power Corp. to
accommodate the Lopez-owned Santa Rita and San Lorenzo plants. That sweetheart
deal cost Meralco P27 billion in penalties. A proposed settlement now pending
before the Energy Regulatory Commission reduced the penalty to P14 billion after
offsetting transmission services which Napocor for its part failed to deliver.
(Winston Garcia is correct in denouncing that sweetheart
deal. The Government Service Insurance System which he represents stands to
shoulder a share in the penalty proportionate to its 30 percent shareholdings.)
But the issue of sweetheart deals should be treated
separately from sourcing of power supply during peak demand. The 1,500 megawatts
covered by the accommodation to Lopez-owned companies, plus a few hundred
megawatts more contracted from other Meralco suppliers, are enough to cover the
minimum requirements of the Meralco service area. In times of higher demand, the
additional supply is provided by Napocor under a newly minted transitional
service contract which provides for 1,000 to 1,500 megawatts.
These two sources covered by contracts are, however, not
enough to supply all power needs during peak hours. More sources have to be
tapped for an additional 500 megawatts to 1,000 megawatts. This is where
Meralco’s purchases from the spot market come in.
It has to go to the wholesale spot market because that is
where power is traded as provided for under the Electric Power Industry Reform
Act. Meralco can, we suppose, call up any of the generating plants on standby
and place an order. But what’s the guarantee Meralco will come up with a price
that will not gouge its customers? None, and we have already referred to the
sweetheart deals which favor certain suppliers.
This is the reason the Wholesale Electricity Spot Market was
put up. It provides for a market where suppliers can price their output under a
competitive environment. WESM is also the place where buyers can secure their
supply at the best price.
The WEMS at present is not perfect for two reasons. One,
Napocor and the Power Sector Assets and Liabilities Management Corp. continue to
control bulk of the supply. Two, Meralco remains the single dominant buyer in
the Luzon grid.
But that’s to be expected in the transition to a fully competitive market.
The government focus, therefore, should be making WESM work, instead of
sabotaging it with all this talk about compelling Meralco to stop buying from
the spot market.
