Meralco denies midnight contracts allegations


Manila Electric Co. (Meralco), the country’s largest power distribution utility, categorically denied it has entered midnight contracts as alleged by certain interest groups, which questioned the seven Power Supply Agreements (PSAs) that have been pending with the Energy Regulatory Commission (ERC) since April 2016.

The company said that these PSAs were legally filed in accordance with ERC rules and regulations with the aim of ensuring adequate and reliable power supply at least cost to Meralco’s more than six million customers.

The Center for Energy, Ecology, and Development (CEED), along with Sanlakas, Philippine Movement for Climate Justice (PMCJ), Freedom from Debt Coalition (FDC), Koalisyong Pabahay ng Pilipinas (KPP) and other member organizations of the Power for People (P4P) filed separate petitions in the ERC last June 28, questioning various irregularities concerning the process of application, as well as the negative consequences of approving Meralco’s PSA applications.

P4P said that these PSAs are midnight contracts and will result in “costlier and dirtier energy from coal.”
Meralco said such allegations are “baseless and totally unsubstantiated.”

“Each of these PSAs has undergone a very rigorous, lengthy and at times, contentious negotiation process with the generation companies. It actually took many months and years before these agreements were signed and filed with the ERC. Negotiation for one PSA actually started way back in 2012 and was only concluded and signed in 2016. There is therefore, absolutely no factual basis to claim that these are midnight contracts,” William S. Pamintuan, Meralco first vice president and head of legal and corporate governance, said on Tuesday.

“Meralco negotiated these PSAs in utmost good faith and the resulting rates and other terms and conditions that were filed before the ERC are very competitive and favorable to the consumers,” he said.

Pamintuan also stated for the record that, “There were actually more than 90 PSAs that were filed by different distribution utilities and electric cooperatives following the ERC resolution restating the effectivity of the Competitive Selection Process (CSP). But out of these 90 PSAs, it is only the seven Meralco PSAs that curiously had been specifically singled out and questioned by certain interest groups. It is on record that Meralco was not among those that asked the ERC to restate the effectivity of the CSP mandate.”

Meralco also belied the false claim that approval of the seven PSAs will result in “dirtier energy from coal” considering that the generation companies that it had contracted to supply power to its customers will be utilizing state of the art technology with high efficiency and low emission power plants.

In fact, the country’s first power plant to use Ultra Supercritical technology, which is used in countries like the US, China, Japan and Germany, will be among the plants that will supply lower emission and more fuel efficient power to Meralco’s customers once the ERC approves the PSAs, Pamintuan said.

He also emphasized that, “In order to sustain the growth trajectory of the Philippine economy and promote inclusive growth, it is very critical to note the importance of building more power plants in a timely manner to ensure the country’s energy security especially as we support the ‘Build, Build, Build’ agenda of President Rodrigo Duterte.”

“At the end of the day, we need power if we want to build. Otherwise, economic growth cannot be supported or sustained. The Luzon power crisis in the early 1990s, and the Mindanao power crisis in 2012 are testaments to the pernicious effect that widespread and extended power outages wreaks on our economy and our people as businesses close down and unemployment goes up,” he said.

“In the past few years, Meralco has achieved consistent low rates for its consumers, record reliability levels, record system loss reduction levels, and has provided more innovative products and services to its customers, uplifting their lives and helping power the progress of the nation as a whole. It remains committed to its mandate to provide adequate, reliable and quality electric service in the least costly manner and undergo all proper and legal procedures in compliance with regulatory requirements,” Pamintuan added.


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