Meralco, Power Distributors Urged to Forge Transition Supply Contracts

Manila Bulletin, June 30, 2005 | Go to article overview
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Meralco, Power Distributors Urged to Forge Transition Supply Contracts


Byline: JAMES A. LOYOLA

The Energy Department yesterday called on the Manila Electric Company (Meralco) and other private electric distributors, electric cooperatives and large power users to enter into transition supply contracts with the National Power Corporation (NPC) and the Power Sector Assets and Liabilities Management Corporation (PSALM).

Energy Secretary Raphael Lotilla said this is in preparation for the full deregulation of the power generation sector.

The transition supply contracts will ensure that electricity consumers are shielded from price fluctuations while the power generating sector is shifting from a highly regulated to a fully deregulated regime.

Investors, assured with a ready market for the generating plants, would be more inclined to offer better prices for these power plants that the government is selling as part of the privatization and restructuring program for the power sector.

"Selling power plants backed with transition supply contracts will enable us to maximize the privatization proceeds that will, in turn, be used to pay off NPCs debts," Lotilla said.

He pointed out that the transition supply contracts would bring two-fold benefits: It would assure consumers of stable electricity prices while the industry is going through major adjustments and it will considerably lighten the tax burden on citizens as NPCs debts are progressively retired using privatization proceeds.

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Meralco, Power Distributors Urged to Forge Transition Supply Contracts
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