No stopping power hike

by Alena Mae S. Flores, January 8, 2015
from Manila Standard Today

Meralco lowers rates, but sees increase soon

FOR the third straight month, the Manila Electric Co. will be charging lower power rates in January, but admitted it may not be able to sustain such rates because of the disputed feed-in tariff allowance for the renewable energy sector in February and the onset of the warm season in March.

On Wednesday, Meralco said consumers, with an average consumption of 200 kWh per month, will see a P38 decrease in their power bill for January after power rates went down by P0.19/kwh. The January rate reduction will bring to P0.79/kWh the total decrease in power rates since October.

“The reduction in the generation charge was mainly driven by lower charges from the plants under the power supply agreements, which registered a reduction of P0.73 per kWh due to the normal operations of the power plants during the December supply month and the lower cost of fuel,” Meralco said.

The largest power distributor in the country also said generation charge, or the portion of the bill that goes to the generation companies or power producers, also decreased by P0.22 to P4.72 per KWh this January from P4.94 last December – the lowest generation charge in 15 months.

The power firm, however, said it might not be able to sustain the lower generation charges because they will be charging the P0.0406/kWh feed-in tariff allowance (FIT All) for the renewable energy sector in February, as directed by the Energy Regulatory Commission.

Meralco spokesman Joe Zaldarriaga said they will have to implement the FIT All this month unless the Supreme Court grants a pending appeal and issues a temporary restraining order against the tariff’s implementation.

“We would like to clarify that the billing and collection of the P0.0406/kWh FIT Allowance that is sought to be enjoined in the case that was filed with the Supreme Court is not a Meralco tariff charge,” said Meralco lawyer William Pamintuan.

“[It] is actually a distinct and separate line item charge similar to other pass-through charges that Meralco is required to bill and collect from its customers pursuant to lawful orders of its regulators,” Pamintuan said.

Meralco was only included as a respondent in the case that was filed by lawyer Remigio Michael Ancheta on Tuesday since it was the company tasked by the ERC to collect the questioned surcharge from its consumers and remit the same to the National Transmission Corporation (TransCo).

“Meralco shall comply with any order or directive from the Supreme Court or the ERC regarding this case,” Pamintuan added.

In his appeal to the SC, Ancheta argued that the high court should stop the government from imposing the FIT All for “electricity that has yet to be generated by power plants that have yet to be built” because the ERC erred in allowing an advance collection of the tariff.

Ancheta estimated that a usual residential power user, who consumes 200 kwh in a month, will pay an additional charge of P8.12 under the FIT system and that translates to P230.12 million a month or about P2.7 billion this year.

But the ERC provisionally approved the Fit-All in November and directed power distributors to collect the tariff this month for TransCo.

“We will await the Court’s action and comply with its directives addressed to the ERC,” ERC spokesman Francis Saturnino Juan said.

Juan declined to comment on Ancheta’s arguments, but maintained there are already renewable energy projects that are operating, or will soon be operating, that may be certified as eligible to avail of the feed-in tariff.

Aside from the FIT All, Meralco said power rates may also increase March because of the usually increased demand for power during the summer months, aggravated by the maintenance shutdown of the Malampaya gas facility from March to April.

“Add to this the upward adjustment and longer threshold reference period before the secondary price cap in the [Wholesale Electricity Spot Market] is triggered,” Meralco said, referring to the new rules that were imposed after the spot market price spike in December 2013.

Several power companies are still under investigation for allegedly colluding to drive up prices at the WESM when the Malampaya plant underwent a 30-day maintenance shut down.

While prices remained high at the WESM, Meralco said the lower charges from its power supply agreements in December offset the increased charges of P0.24 from independent power producers and P1.68 from the WESM.

Meralco said it sourced 52 percent of its power requirements for December from its power supply agreements, 45 percent from IPPs and three percent from the WESM.

Contributing also to the overall downward adjustment in the bills to households in January is the P0.026 decrease in taxes and P0.011 cumulative decrease in the system loss charge and subsidies. Transmission charge, on the other hand, increased by P0.062 per kWh.

Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges.

Payment for the generation charge goes to the power suppliers, such as the plants selling to Meralco through the WESM and under the PSAs, as well as the IPPs.

Payment for the transmission charge, meanwhile, goes to the National Grid Corporation of the Philippines. Of the total bill, only the distribution, supply, and metering charges accrue to Meralco.

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