PIPPA turns down force majeure claims of DUs, ECs

Meralco to launch upgraded distribution system in September

The Philippine Independent Power Producers Association Inc. (PIPPA) has rejected the force majeure provision of the power generation companies in their power-supply agreements (PSAs) with distribution utilities (DUs), and electric cooperatives (ECs).

“Mandating generation companies to FM claims by DUs/ECs not only disrupts the power supply chain. It is also tantamount to one sector taking advantage of the other,” PIPPA was quoted in a report.

Laban Konsyumer Inc. (LKI) President Victorio Mario Dimagiba said power generation companies should accept the FM claim of DUs, adding that electricity consumers in Luzon should be spared from paying fixed charges for generation capacity that was not used.

However, PIPPA said regulators should not allow this as it will affect the generating companies’ ability to pay for fuel, operation costs, and even loans.

“This is what we need to emphasize that the power industry and its regulators must not allow this. Rather, we must address these problems and all its complications as one industry where everybody shares the burden and everyone benefits from the gains,” PIPPA was quoted.

Dimagiba claimed that electricity bills in May should be lower after Meralco invoked the FM provision in power-supply agreements.

“Due to the significant reduction in power demand in its service area during the enhanced community quarantine period, Meralco invoked the FM provision in its PSAs for the duration of the lockdown, reducing fixed charges for generation capacity that was not consumed,” Meralco had said.

Dimagiba added that Meralco invoked the provision in its PSA for the April rates, which only covers 10 days of the enhanced community quarantine.

“The full 30-day lockdown shall be reported in the May rate report. We believe the bigger relief of peso per kWh shall be passed on to the consumers at that time,” Dimagiba said.

 

 

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