Joint Statement of Secretary Raphael P.M. Lotilla (DOE) and Secretary Romulo L. Neri (NEDA)

01 Apr 2006

We wish to announce that the Government has accepted Meralco's unconditional offer contained in a letter addressed to President Gloria Macapagal-Arroyo to give its large industrial and commercial customers with demand volume of at least 1MW the choice of determining their own suppliers. Meralco, through its Chairman and CEO Mr. Manuel Lopez, formally indicated that it is making this offer to support the Government's efforts of restructuring and privatization in the power sector pursuant to the Electric Power Industry Reform Act (EPIRA) and in line with the company's decision to concentrate on its distribution business and supply of electricity to its customers.
We anticipate that this offer and its acceptance will help enable the industrial sector avail of the lower time-of-use rates of the National Power Corporation (NPC), help reduce the costs of doing business in the Meralco franchise area, promote investments and the creation of additional jobs, and help push privatization forward. The President, therefore, has directed NPC with the assistance of the National Transmission Company (Transco) to finalize with Meralco, within two (2) weeks from today, the details and mechanics by which this arrangement may be implemented at the soonest possible time, subject to the approval of the Energy Regulatory Commission (ERC) where necessary in accordance with law.
Government will consider Meralco's separate concern on the dispatch of its independent power producers (IPPs). In any event, any possible arrangement concerning dispatch will have to fall away upon the full commercial operations of the Philippine wholesale electricity spot market (WESM) which is expected to happen in the near future. It is, therefore, in the public interest to make WESM operational soonest.
Designed to promote competition in the power sector, at the heart of WESM is the full realization of availability of alternatives and the customer's exercise of the power of choice. While initially open only to distribution utilities and suppliers, WESM will be open to large customers then eventually even households. The President extends her full support to WESM and to the ERC's efforts to complete the review process for the pricing components of WESM.

Strategic Communications and Partnership Division
Tel. No. (632) 9029067