Meralco customers face higher generation charges in February

By Alena Mae S. Flores – February 04, 2019 at 07:30 pm

Customers of power retailer Manila Electric Co. face higher generation charges this month following the normalization of the capacity fees and higher outages in January.

“It will be higher than January. Similar to the past two or three years, after the generation charge reduction in January, there’s always normalization in February,” said Meralco head of utility economics Lawrence Fernandez.

He said for January, Meralco’s power rates declined because of the reduced capacity fees for the outage allowance from the power generators.

“If power plants do not use their outage allowance for the year, then by December they charge us lower or with no capacity fees, and that leads to the lower generation charge in January. Since we have a new calendar year starting January, then the capacity fees go back to normal and that will be reflected in the January generation charge,” he said.

Fernandez said Meralco also noticed that many power plants went on outage in the second half of January, resulting in higher prices at the Wholesale Electricity Spot Market.

“More than 3,300 MW (megawatts) of capacity went on outage, both forced outage and due to scheduled outages. We noticed that the spot market prices responded accordingly, meaning it went up. That might also affect the generation charge in February,” he said.

Meralco reported on January that its overall electricity rates declined P0.3418 per kilowatt-hour, or equivalent to a decrease of P68 in the total monthly bill of a typical household consuming 200 kWh.

Meralco’s January rates decreased to P9.8385 per kWh in January from P10.1803 per kWh in December.

The generation charge for January went down to P4.9119 per kWh, a decrease of P0.4184 per kWh from P5.3303 per kWh in December.Meanwhile, Finance Secretary Carlos Dominguez III approved a revenue regulation reducing by almost half the 25- to 32-percent creditable withholding tax on the refund due to customers of Meralco to a flat 15 percent as provided under the Tax Reform for Acceleration and Inclusion Law.

The new regulation also lowers the current 20-percent withholding tax on the interest income on the refund paid to non-residential Meralco customers to 15 percent.

For other electric distribution utilities, the withholding tax on interest income on the refund paid to their non-residential customers, currently at 20 percent, was also cut to 15 percent under the new RR.

Finance Undersecretary Antonette Tionko, who recommended the approval of the new RR, said the withholding tax on the interest income on the refund of meter deposits paid to residential and general service customers whose monthly consumption exceeds 200 kilowatts per hour would be retained at 10 percent.

The refund to Meralco customers was ordered by the Supreme Court almost 16 years ago. The high court affirmed with finality on April 9, 2003 the decision of the then-Energy Regulatory Board or ERB (now Energy Regulatory Commission) to refund customers who were overcharged by Meralco since February 1994 because the company had wrongly passed on its income tax payments as costs tucked in the consumers’ monthly electricity bills.

Under the existing RR issued by the Bureau of Internal Revenue, the creditable withholding tax for the refund paid to Meralco is 25 percent for customers with active contracts and 32 percent for those with terminated contracts.