MANILA, August 14, 2003  (STAR) By Donnabelle Gatdula  - The Manila Electric Co. (Meralco) said yesterday that the P20-billion settlement agreement with the National Power Corp. (Napocor) will result in net savings of 12 centavos per kilowatt-hour to its consumers.

"I sincerely think this agreement will lead to customers paying less. It will be a reduction in power rates," Meralco president Jesus Francisco said during the forum on "Electric Industry Regulation: The UK Experience on Performance-based Regulation."

Francisco’s statement countered the claim of some groups that the settlement between the two power firms will result in higher power rates in the future.

Under the agreement, Meralco will pay Napocor P27.515 billion for the electricity it contracted but failed to purchase from the government-owned power corporation. On the other hand, Napocor will pay Meralco P7.465 billion for its failure to provide transmission services to Meralco’s independent power producers. The net settlement amounted to P20.05 billion, which Meralco will settle within five years.

Francisco said they hope to submit the joint application of Meralco and Napocor on the settlement agreement to the ERC within this week. "We hope that the consumer groups will be able to voice out their opinion on the deal," he said.

Based on March estimates, Francisco said there is a 12-centavo per kwh reduction to consumers net of penalties.

"Prices move everyday. We do not know yet how much will be the reduction at present," he said.

However, the National Association of Electric Consumers for Reform Inc. (Nasecore) said yesterday that if the ERC allows Meralco to pass on to consumers the worth of power it failed to buy from Napocor since year 2001, "it will result in the billing of hapless consumers twice."

Nasecore president Pete Ilagan said the energy charge and power purchased adjustment (PPA) found in the previous electric bill and the generation charge in the new monthly electric bill already incorporate the cost of power that Napocor charges Meralco. This includes the power that Meralco failed to purchase from Napocor since 2001.

"Napocor’s PPA and losses will increase as it will be forced to reduce the utilization of its power. Granting that the reduced Napocor PPA as ordered by President Arroyo last year will continue to be in effect, then Napocor will have to source additional loans to pay their PPA costs and losses," Ilagan said.

The PPA is now incorporated in the generation and transmission charges of the consumer’s electric bills and is recovered through the Generation Recovery Adjustment Mechanism (GRAM).

Meanwhile, Meralco said the refund for the company’s 567,000 accounts with terminated contracts has already started.

"We urge customers with terminated contracts to contact us so we can start to validate their refund request," Meralco Refund Management Task Force head Leo Mabale said.

Customers in this group include registered residential and general services customers whose services were terminated since February 1994. They must also have had a last complete month’s bill of 100 kwh or less.

Included in this group are previous Meralco customers who have transferred residence, sold their houses and those whose houses have been burned or whose electric service has been disconnected for a long period of time.

According to Mabale, identity of the rightful claimant is crucial to this refund group.

Reported by: Sol Jose Vanzi

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