Meralco justifies rate adjustment

by Alena Mae S. Flores – February 21, 2016 at 11:35 pm

from Manila Standard

Manila Electric Co., the country’s biggest electricity retailer, said over the weekend it complied with the order of the Energy Regulatory Commission to explain its P0.42 per kilowatt-hour rate increase in February.

Meralco said in a filing with the ERC it adhered to the rules of the regulator in computing its pass-through charges.

It said the February power rates reflected the normal power costs compared with the January rates that included computation on the outage allowances of power plants.

“It is further emphasized that the Epira [Electric Power Industry Reform Act] and its implementing rules and regulations allows the automatic pass through of these charges,” it said.

Meralco said the generation charges for February increased P0.2453 per kWh to P4.1425 per kWh from P3.3863 per kWh due to the rise in the average rate of power supply agreement plants in January over the December 2015 supply months.

“After the true up of the capacity fees every December of each year to account for the unutilized outage allowance of the power plants for the full calendar year, the capacity charges normalize in January of the following year,” Meralco said.

Meralco reported that generation charges in the January billing dropped P.049 per KWh brought about by the reconciliation of the outage allowances of the Pagbilao, Sual, Calaca and Ilijan power plants.

It said the recent February billing merely reflected the normal generation costs of plants supplying power to Meralco under their respective PSAs.

The PSAs approved by the ERC provide for an (forced and unforced) outage allowance for each plant. Each of the PSA plants has a fixed capacity fees spread over 12 months by dividing the total by the number of days in a year less the outage allowance to arrive at a daily capacity fee rate.

“Without the effect of the unused outage allowance, the average rate of the PSAs for the January 2016 supply month would have increased by P0.17 per kWh and the generation charge for the February 2016 billing months would have gone down instead by P0.266 per kWh,” Meralco said.

It said the increase in the PSA generation costs was tempered by the P0.0071 per kWh reduction in the average rate of the independent power producer plants and the P2.2096 per kWh cut in the average price at the Wholesale Electricity Spot Market.

Meralco also said the P0.0821 per kWh increase in the transmission charge was due to the P0.09 per kWh rise in the billings of National Grid Corp. of the Philippines for the January supply month on account of higher ancillary charges.

The company said the P0.0436 per kWh increase in the system loss to residential consumers was the result in the higher purchased power cost and the 12-month moving system loss to 6.65 percent from 6.47 percent.

“It should be further emphasized that the foregoing charges are pass-through charges which are revenue-neutral to Meralco. Meralco neither earns nor benefits from pass-through charges,” the utility said.

It said its distribution charges remained unchanged since July 2015.