ERB welcomes independent study on Meralco petition

The Energy Regulatory Board (ERB) welcomed yesterday Malacañang’s move asking the Department of Energy (DOE) to conduct an independent study on the unbundled rate petition of the Manila Electric Co. (Meralco).

"We welcome independent assessment of the DOE," ERC Chairman Fe Barin said, noting that the result of DOE’s assessment will not in any way affect the decision of the ERC.

Earlier, President Arroyo ordered the DOE to evaluate the "validity" of the P3.97 per kilowatt-hour power rate increase being sought by the Meralco from the ERC.

"We will remain independent. Everybody is welcome to conduct their own study on the petition. This is why we are conducting public hearings," Barin said.

Due to public pressure and Malacañang’s move to step in to issue, Meralco yesterday decided to amend the unbundled rates that they have submitted to ERC.

According to the ERC chairman, the revised rates that Meralco submitted "seem better than the previous application."

She said that based on their initial assessment, the new rates of Meralco will lessen the impact to the public. "The amended rates will affect only about 53 percent of their customers. I guess, it is better since they have smoothen the increase," she added.

But Barin pointed out that it is still up to ERC to approve the unbundled rate application of Meralco. "You have to keep in mind that these are just the rates they are requesting. Whether we will approve it or not is another issue," she said.

Barin said they have scheduled two more public hearings for Meralco’s application. The next meeting is scheduled on Friday (April 5). After that the ERC would just accept written public opinion/opposition.

The ERC chief also explained that the commission will also have an option to implement the unbundled rate petition of the power utility firms, like that of Meralco, on a staggered basis to lessen the impact to the public.

"If we will approve it in June, it (unbundled rate of Meralco) will be implemented in July," she said.

In its new alternative on rate unbundling, Meralco would temper the increases to residential customers consuming 51 to 300 kWh per month which comprise almost 70 percent of total residential customers.

Based on the new unbundled rate petition of Meralco, no residential customer will experience a 100-percent increase, not in the March 11 submission and not in the new alternative petition.

The Lopez-controlled power firm said the highest increase in the March 11 submission, of 25.4 percent for customers consuming 100 kWh has been reduced to just 10.6 percent under the revised submission.

Meralco said residential users will not increase by P3.97 per kWh nor by 116 percent contrary to Bayan Muna’s allegation.

The power firm clarified that the basic charge is only one component of Meralco’s billing to its customers. In the March 2002 bill, the rate to residential customers consuming more than 50 kWh in March 2002 was already P6.83 per kWh, consisting of a basic charge of P3.40 per kWh, purchased power adjustment (PPA) of P3.22 per kWh, and equivalent currency exchange rate adjustment (CERA) of P0.21 per kWh.

Using the rate schedules Meralco submitted during the hearing last March 11, rates to residential users consuming more than 300 kWh will increase by only 55 centavos or an 8.1-percent increase.

In compliance with ERC’s Uniform Filing Requirements to use year 2000 costings and rate base, Meralco said the proposed unbundling will naturally have higher figures. "For example, current basic distribution charges which were last set in February 1994 based on 1993 costs and rate base would now have to be adjusted to year 2000 costs and rate base.

From 1994 to 2000, Meralco said it had invested a total of P45 billion in its distribution system. Also, the peso has devaluated by 85 percent from P27.77 to P51.42 to a dollar, resulting in higher rate base.

The unbundling of rate is mandated by Republic Act 9136 to reflect the true cost of providing electric service. All distribution utilities, including Meralco, have submitted an application for unbundled rate to ERC last Dec. 26. ERC will decide on this matter, based on the law, on or before June 26 this year. – With Katherine Adraneda