ERC orders Meralco to explain P0.42/kwh rate hike

by Myrna Velasco – February 11, 2016

from Manila Bulletin

Power utility giant Manila Electric Company (Meralco) is being asked by the Energy Regulatory Commission (ERC) to explain the overall P0.42 per kilowatt-hour upward adjustment in its rates this month given that it was a low-demand period and the cost of fuels, including that of coal, had been on a downtrend.

“We have an order that is actually being circulated right now and that order will indicate that we’re directing Meralco to submit the justifications for why the rate increased by a certain amount for last month,” ERC Chairman Jose Vicente B. Salazar has announced to reporters in late afternoon briefing on Wednesday.

He added that the policy is to submit the data-justifications at the end of the next month preceding a billing period. However, given the questioned circumstances in the February billing, the ERC will order the utility firm on its document submissions for post-verification process ahead of time.

“Definitely, they will submit it by February 28, but since there’s now an indication that it’s a substantial increase, we’re asking them (Meralco) to justify why it had been substantial,” Salazar stressed.

In addition, ERC spokesperson Floresinda B. Digal has emphasized that they will scrutinize the “replacement power sourcing” of Meralco within that particular period when its contracted capacities from Masinloc and Calaca plants may not have been fully available because of their scheduled maintenance shutdown.

She similarly indicated that the re-pricing of the gas supply for its contracted First Gas facilities shall be reviewed given the widely-reported plummeting oil prices, which is the index in pricing Malampaya gas.

“All of the costs that would be recovered from the consumers will be re-assessed in the verification process because it’s there where we would see how they have remedied a situation,” she said.

The ERC official further noted that under the rules, there is a prescribed outage allowance for power plants wherein the costs could still be factored in into the rates being reflected in the bills.

“The policy is if the outage is within the allowable outage period, then that’s perfectly okay. However, if it’s already outside the allowable outages, that is the point when they have to determine what will be the basis of the charges,” Digal said.

She emphasized though that the mandate for distribution utilities is to source replacement power always at the “least cost.”

It has to be culled that prices at the Wholesale Electricity Spot Market (WESM) had been down by P2.21 per kWh in January supply month. However, Meralco’s supply procurement from the spot market for the period was just at marginal 6.10-percent.