Meralco power rates may go down this month

By Lenie Lectura -September 9, 2019
from Business Mirror

A stable power supply and a refund order are expected to bring down this month’s generation charge which comprises the bulk of electricity bills, officials from the Manila Electric Co. (Meralco) said over the weekend.

“It is likely we will see a reduction in the generation charge this September,” said Meralco Utility  Economics Head Lawrence S. Fernandez.

The utility firm is expected to release within the week this month’s power rate computation.

Meralco Assistant Vice President and Head of  Public  Information Office Joe Zaldarriaga also observed stable rates. Zaldarriaga said customers may in fact even see a reduction for this month as a result of improvements in the overall power supply situation.

However, the depreciation of the peso may put upward pressure on charges from independent power producers (IPPs). Still, there are two factors that can offset the effect of the weakening of the peso.

“One is the improved supply situation. There were no Yellow or Red Alerts in August so we expect WESM (Wholesale Electricity Spot Market) charges to go down,” said Fernandez.

“The other is the net settlement surplus [NSS] refund being implemented by Philippine Electricity Market Corp. (PEMC), as directed by the ERC (Energy Regulatory Commission),” he added.

Zaldarriaga said Meralco is expected to implement the NSS, which would result in adjustments in WESM’s billing. “This was due to the recent order of the ERC and a recomputation by PEMC, which subsequently resulted in a refund and reduced power costs.”

The ERC found inconsistencies in how PEMC allocated the NSS from June 2018 to May 2019. It ordered PEMC to refund a total of P1.774 billion.

Of the amount, P1.08 billion will be refunded to Meralco customers, P321.96 million will be returned to customers of other distribution utilities and electric cooperatives, and the remaining P371 million will be due to generation companies, retail electricity suppliers and directly connected customers.

“We have directed PEMC to immediately effect the refund,” said ERC Chairman Agnes Devanadera.

The ERC found inconsistencies in the NSS allocations issued by PEMC. Upon validation, the spot market operator reported that the miscalculations were caused by its erroneous application of the formula in its software that is used to determine NSS allocations.

“We are rectifying the misallocation of the NSS through a refund to the market participants who received less than what was due them while collecting from the others who have received more,” said PEMC President Oscar E. Ala.

Ala said PEMC’s inconsistency is similar to a situation “wherein you are supposed to give your son and daughter P 5.00 and P 10.00, respectively. However, you inadvertently gave your son P 10.00 and your daughter P 5.00. And as a parent, one has to correct the amounts given to each.”