Millennium Energy blames Meralco for huge losses

by Myrna Velasco April 10, 2016

http://www.mb.com.ph/millennium-energy-blames-meralco-for-huge-losses/

GENERAL SANTOS CITY – Local firm Millennium Energy, Inc. has elevated its concern to the Energy Regulatory Commission (ERC) that it has been incurring huge losses due to the hefty distribution charges set by Manila Electric Company (Meralco) branding its contract with the power distributor “unreasonable.”

In an interview with reporters over the weekend here, ERC Chairman Jose Vicente B. Salazar noted that Millennium Energy in a letter indicated its dilemma of not being able to offer its capacity in the Wholesale Electricity Spot Market.

“Millennium is losing a lot of money. They are already fighting. Millennium already rescinded its contract with Meralco because it can no longer pay its obligations,” the ERC chief disclosed.

He added that Millennium Energy’s stand as communicated to the ERC had been that: “This contract is unreasonable, so I will not pay anymore.”

Millennium Energy owns the Navotas gas turbine power asset, of which 100-megawatt capacity had been offered as embedded capacity to Meralco.

The part of the deal being complained about by Millennium Energy, according to Salazar, is on their Distribution Wheeling Service Agreement (DWSA).

The ERC chief pointed out that Millennium Energy is also being held liable for violating the must-offer rule of the WESM – because while its capacity is available, it has not been making offers to the spot market due to this ‘contractual conflict’ with Meralco.

Salazar reiterated that Millennium Energy has been “incurring huge losses, because the rate imposed by Meralco is very high under their DWSA.”

The ERC chief qualified though that such tariff is non-bypassable charge and it is being imposed to all generators using the distribution lines to get their capacity delivered to end-users. The differing factor, he said, has been the level of charges because the plant was aligned as embedded capacity to Meralco.

“This is one thing that is crucial with the agreement, Millennium has to pay for it despite the fact that its capacity is not being called in the market for dispatch,” Salazar said.

The ERC chief added, the contention is “that’s like a highway, that you need to pay the charges even if you’re not using them… it’s always reckoned based on the capacity that you can actually offer to the market.”