Meralco eyes cut in distribution, metering rates

by Riza T. Olchondra, 12 June 2015
from Philippine Daily Inquirer

Manila Electric Co. has asked the Energy Regulatory Commission (ERC) for authority to implement a temporary reduction in power distribution charges pending the regular reset of its rate.

In its application submitted to ERC, Meralco said it intended to cut by an average of 10.4 percent its current distribution, supply and metering charges.

The distribution-related components of the electric bill of Meralco customers have not changed since July 2014 and are lower than the rate in the same period last year, it said.

Meralco clarified that it would be undergoing a rate reset process for the 4th Regulatory Period (4th RP) under the Performance-Based Regulation (PBR) rate setting methodology.

“Pending the issuance of applicable rules that would govern the 4th regulatory reset filing, it will be implementing an interim rate, effective upon approval by the regulator,” Meralco said.

The proposed 10.4-percent reduction will be uniformly applied across all customer classes of Meralco. This translates to the following reductions in the total bill of residential customers at varying consumption levels: 200 kWh, P52; 300 kWh, P89; 400 kWh, P134; 500 kWh, P201.

Meralco earlier said electricity rates would go down in June on lower generation rates by suppliers. It is the second straight month of reduction in power rates totaling P1.28 per kWh for customers using 200 kWh of electricity a month.

In an advisory, Meralco said its overall rate decreased by 58 centavos to P9.40 per kWh for June. This did not yet reflect the proposed reduction in distribution charges.

For a typical household consuming 200 kWh, the overall electricity bill for June will go down by P116 compared to last month.

The biggest factor that contributed to the lowering of rates was the generation charge, which decreased by 36 centavos per kWh to P4.45 per kWh this month. This is its lowest since October 2010, Meralco said.

Transmission charge also dropped by 9 centavos per kWh. Taxes and other charges also went down by 6 centavos and 7 centavos per kWh, respectively.

Lower fuel costs and increased dispatch from their power generation units allowed plants under the Independent Power Producers (IPPs) and Power Supply Agreements (PSAs) to bring down their generation costs.

IPPs and PSAs registered reductions of 67 centavos and 59 centavos per kWh, respectively.

The reductions in IPP and PSA rates more than offset a P2.85 per kWh increase in charges at the Wholesale Electricity Spot Market (WESM).

WESM exhibited price spikes especially beginning the week of May 11, as a number of plants went on forced outages or reduced their output.

The high WESM clearing prices, which at times approached P30 per kWh, were sustained for the rest of the supply month.

According to the Philippine Electricity Market Corp. (PEMC), the operator of the WESM, regulatory price caps, which were set in place to prevent price shocks in the spot market, were not triggered.

The share of IPPs, PSAs and WESM to Meralco’s total power requirements stood at 45 percent, 48 percent, and 7 percent, respectively.

In various orders, all dated June 1, 2015, the Energy Regulatory Commission or ERC allowed Meralco generation cost under-recoveries (costs already paid to suppliers but not collected), transmission cost under-recoveries, system loss cost over-recoveries, and lifeline cost under-recoveries for the period January 2011 to December 2011.

The resulting rate amounted to a recovery of P0.0447 per kWh for a still-undisclosed nuber of months starting June. Meralco said this was incorporated in so-called “other charges,” which had an overall decline this month.


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