Regulator to quiz Meralco on Feb power rate hike

ERC TAKES NOTE OF RECENT DECLINE IN WORLD OIL PRICES

by: Riza T. Olchondra – 12:24 AM February 8th, 2016

from Philippine Daily Inquirer

The Energy Regulatory Commission (ERC) said it would order the Manila Electric Co. (Meralco) to explain the increase in power rates this month amid the recent decline in oil prices, a large component in generation companies’ operational costs.

In a phone interview, ERC chairperson Jose Vicente B. Salazar said the quasi-judicial body would serve the notice to Meralco “first thing” this week.

“We know that overall rates are mostly composed of pass-through charges such as generation charges. That is, they are charges that Meralco transmits to another party, such as a generation company, after collecting the same from power consumers in its franchise. We do know that oil prices is just one factor among many in the [generating costs]. But we want details on the computation right away especially in light of the recent decline in oil prices,” Salazar said.

Under current rules, Meralco is required to submit to ERC its calculation of the automatic pass-through charges by the end of the month after the review period. That means that rates for the month of February, which were determined around end-January, should be submitted to the ERC by end-February.

Salazar said ERC wanted Meralco to submit the computations much earlier. He said this would help the ERC address feedback from consumer groups and individual consumers.

In an advisory Friday, Meralco said rates for its residential customers will go up by 42 centavos per (kWh) this month. This meant a typical household consuming 200 kWh would see an increase of about P85 in the electricity bill.

The generation charge, which takes up the bulk of overall rates, increased by 25 centavos per kWh. “Plants under the Power Supply Agreements (PSAs) registered an increase of 76 centavos per kWh. Cost of purchases from PSAs, which were low last month due to adjustments from an annual reconciliation of outage allowances, normalized this month,” Meralco said.

Also contributing to the increase in PSA charges were their lower plant capacity factors, partly due to the scheduled maintenance shutdown of one unit each of the Calaca and Masinloc power plants, Meralco said.

The increase in the PSA charges cancelled out the lower charges from the Wholesale Electricity Spot Market (WESM) and Independent Power Producers (IPPs), Meralco said. WESM charges dropped by P2.21 per kWh, largely due to lower spot market demand, it added.

The average rate of the IPPs also slightly went down by 1 centavo per kWh, Meralco said. The average price of natural gas for the First Gas plants went down following the quarterly repricing of the Malampaya natural gas. The lower fuel costs were not maximized, however, since the dispatch level of the IPP was reduced.

Meanwhile, transmission charge increased by 8 centavos per kWh due to higher ancillary charges. Following the increase in generation and transmission charges, taxes also increased by 5 centavos per kWh. Other charges likewise increased by 4 centavos per kWh.

Meralco’s distribution, supply, and metering charges remained unchanged after it registered a reduction last July.

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