STATE-OWNED National Power Corp. (Napocor) yesterday said it was not overcharging the country’s largest electricity distributor for power transmission line costs, but said the order by regulators to refund was “welcome.”
In a statement, Napocor spokesman Dennis S. Gana said the state firm merely follows its supply contract with the Manila Electric Co. (Meralco) and other utilities.
Mr. Gana said the contract stipulated that generation charges based on “time of use” rates approved by the Energy Regulatory Commission (ERC) must include adjustments to “reflect the incremental increase or decrease in the actual transmission line cost,” among others such as the Deferred Accounting Adjustment and Incremental Currency Exchange Rate Adjustments.
Napocor charges distribution utilities for losses incurred while transmitting power at a rate of 2.98% of the generation charge. Under current rates for Luzon, this system loss charge could range from 6.9 centavos to 19.4 centavos per kilowatt-hour (kWh). Last month, Meralco bought 906 million kWh from Napocor.
At the same time, however, Meralco and other utilities buying power at the Wholesale Electricity Spot Market (WESM) are required to pay line rentals for power obtained from Napocor.
In a 2008 complaint to the ERC, Meralco said this constituted double-charging for Meralco and “all distribution utilities similarly situated.”
Meralco claimed this was not the case with private power suppliers.
Things came to a head when a transmission line and substation in Bulacan broke down in 2008, leading to congestion and outages. Spot market prices jumped to P33.53/kWh, jacking up transmission line rentals.
Mr. Gana pointed out that while the time of use rates overlap with the WESM charges set at the start of market operations in 2006, these were all cleared by regulators.
Meralco could not be reached for comment.
Mr. Gana said the ERC’s decision last March ordering a refund was still welcome as this would allow Napocor to collect the 2.98% system loss charge from utilities that are not officially members of the WESM.
In the March 10 decision released to the public last month, the ERC said: “If the line rental transmission loss component is more than the 2.98% transmission loss cost in the [Napocor’s time of use rates, Napocor] should bill the distribution utility or any party with a contract with [Napocor] the incremental adjustment to reflect the actual transmission line cost. On the other hand, [Napocor] should implement a refund if actual transmission line loss is less than the 2.98% loss factor.”