Meralco rejects write-off of P34.5-M Millennium Energy dues

by Myrna Velasco – May 14, 2016

from Manila Bulletin

Power utility giant Manila Electric Company (Meralco) thumbs down the plea of Millennium Energy, Inc. (MEI) on write-off of demanded P34.5 million worth of distribution charges billed to it relating to the capacity delivered by its Navotas land-based gas turbine power facility.

The power generation firm formally filed a petition with the Energy Regulatory Commission (ERC) seeking dispute resolution on the Distribution Wheeling Service Agreement (DWSA) it entered into with Meralco. MEI in particular has prayed that it should not be liable “for the unpaid billings amounting to P34,501,920.04.”

In its filing with the ERC, MEI stipulated that due to its “very tight and precarious financial condition, it can no longer continue paying the distribution wheeling charges for the month of November, 2015 which was due on 11 December, 2015.”

MEI similarly indicated that the total payments of P92.105 million that it made to Meralco may already cover fully the use of the latter’s facility for the wheeling of generated electricity from Millennium plant.

Nevertheless, Meralco spokesperson Joe Zaldarriaga, in a statement to the media,  has qualified that “waiving the payment of distribution wheeling service (DWS) charges would be tantamount to letting MEI use the distribution grid of Meralco for free.”

He explained “should this be the case, it would mean that the said charges, which are rightfully the responsibility of MEI, may have to be borne by electricity customers.

The Meralco executive expounded that “by seeking for a reprieve from the payment of DWS charges, MEI is not honoring the sanctity of its contract with Meralco, which it freely entered into in the first place.”

Zaldarriaga reiterated “should Meralco waive MEI’s payment for DWS charges, this will serve as precedent, and others will start asking for a reprieve from paying DWS charges as well.”

He further asserted that “costs incurred by a distribution utility to serve MEI or other embedded generators would then have to be recovered from customers in the form of a cross-subsidy.”

As laid down under the Electric Power Industry Reform Act (EPIRA), distribution wheeling charges account for “the cost or charge regulated by the ERC, including the company’s distribution wheeling service charges to MEI.”

Zaldarriaga said “the distribution wheeling charges billed by Meralco to MEI have been agreed by both parties and approved by the regulators, so I do not see any reason why they would suddenly stop paying.”

He stressed “there is clearly ‘no dispute’ to speak of in this case, only a refusal to pay rightful charges.”

The company executive qualified that “Meralco complied with all its obligations under its DWSA with MEI, and was only acting in compliance with the parameters agreed to by both parties and as approved by the ERC.”