ERC to Meralco: Justify power-rate hike

by Lenie Lectura – February 11, 2016

from Business Mirror

The Energy Regulatory Commission (ERC) will ask the Manila Electric Co. (Meralco) to justify the power- rate hike it implemented this month.

The regulator, according to ERC Commissioner Jose Vicente Salazar, finds the utility firm’s latest rate adjustment “too high.”

“Nakita namin masyadong malaki ’yung increase. We are asking them to justify that increase,” he said on late Wednesday afternoon during a media briefing.

“This is urgent for us to determine if the increase is really justified. An order is forthcoming, maybe tomorrow, and will be transmitted to Meralco so they could explain immediately,” the ERC chief added.

On February 5 Meralco announced that electricity bill for this month will go up by P0.42 per kilowatt-hour (kWh) to P8.82 per kWh, compared to last month’s overall rates.

For a typical household consuming 200 kWh, the P0.42-per-kWh rate hike translates to an additional amount of around P85 to the overall electricity bill.

The increase in the overall rates was primarily due to higher generation charge, which increased by P0.25 per kWh to P4.17 per kWh from last month.

Generation charge is the largest component of an electric bill, and is a pass-through charge similar to transmission charge. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to National Grid Corp. of the Philippines (NGCP).

When sought for comment, Meralco Senior Vice President Alfredo Panlilio said the factors behind the rate hike were extensively explained in a statement it issued last week.

He also said prior to the P0.42-per- kWh upward adjustment, “we had a P2.28-per-kWh cumulative reduction over the past nine months.”

At P8.82 per kWh, this month’s overall rate is also lower by P1.69 per kWh, compared to February 2015, which stood at P10.51 per kWh.

“What is further noteworthy to state is that, at P8.82 per kWh [of] this month’s overall rates, they are still lower compared to the P9.03 in February of 2010, which is six years ago,” Panlilio said in a text message on Thursday.

The rise in generation charge, Panlilio added, was due to increases in the cost of supply from plants under the power-supply agreements (PSAs), which registered an increase of P0.76 per kWh. Cost of purchases from PSAs, which were low last month due to adjustments from an annual reconciliation of outage allowances, normalized this month.

Also contributing to the increase in PSA charges are their lower plant- capacity factors, partly due to the scheduled maintenance shutdown of one unit each of the Calaca and Masinloc power plants.

Further, this increase in the PSA charges more than offsets the reduction in charges from the Wholesale Electricity Spot Market (WESM) and independent power producers (IPPs).

Charges from the WESM registered a reduction of P2.21 per kWh, largely due to lower system demand.

The average rate of the IPPs also slightly went down by P0.01 per kWh. The average price of natural gas for the First Gas plants went down following the quarterly repricing of Malampaya natural gas. However, the lower fuel costs were offset by reduced dispatch levels of the IPPs.

The share of IPPs, PSAs and WESM to Meralco’s total power requirements stood at 47.2 percent, 46.7 percent and 6.1 percent, respectively.

Transmission charge, meanwhile, went up by P0.08 per kWh due to higher ancillary charges.

Following the increase in generation and transmission charges, taxes also increased by P0.05 per kWh. Other charges likewise increased by P0.04 per kWh.

Meralco’s distribution, supply and metering charges remain unchanged, after it registered a reduction last July.